Three must-know prepaid payment instruments

NEW DELHI: Prepaid payment instruments (PPIs) assist facilitate buy of products and providers, together with monetary providers, remittances, funds transfers to household and associates, amongst others, in opposition to the worth saved in such instruments. These are typically pre-loaded playing cards and, in some circumstances, a pre-defined objective of payment.

Paytm, GPay (semi-closed system PPIs), Gift card (closed system PPIs), debit or bank cards (open system PPIs) are among the many examples of PPIs.

In this piece, we check out three varieties of prepaid payment instruments.

Closed system PPIs

Cash withdrawal just isn’t allowed with such PPIs they usually permit buy of products solely from the issuer entity. Besides, these PPIs can’t be used for payment or settlement with third social gathering providers. Issuance and operation of such instruments will not be labeled as a payment system and doesn’t require approval/authorisation from the Reserve Bank of India (RBI).

Semi-closed System PPIs

These instruments additionally don’t money withdrawal, no matter whether or not they’re issued by banks or non-banks. For occasion, HDFC Bank’s PayZapp, State Bank of India’s YONO are accredited by RBI and the non-banks PPIs similar to PayTm, GPay are additionally used for buy of products and providers, together with monetary providers, funds, money switch, remittance amenities, and so forth.

These can used at service provider areas which have a contract with the issuer to simply accept PPIs as payment instruments.

Open System PPIs

The mostly used PPIs are debit and bank cards. You could make a money withdrawal from these PPIs. However, be cautious whereas withdrawing money from a bank card as a result of by doing so you’ll be charged the next rate of curiosity.

These PPIs issued by banks (accredited by RBI) can be used at any service provider for the acquisition of products and providers, together with monetary providers, remittance amenities, and so forth. Cash withdrawal at ATMs/ Points of Sale (PoS) terminals/Business Correspondents (BCs) is permitted by way of these PPIs.

(Do you might have a personal finance question? Send in your queries at [email protected] and get them answered by trade consultants.)

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