Prepaid Payment Instruments (PPIs)


Now there is no need to carry cash in your wallets and go for shopping. There are many options available by which cashless transactions can be done with ease and convenience.

The RBI classifies every mode of cashless fund transfer or transaction using cards or mobile phones as ‘prepaid payment instrument’. Prepaid payment instruments are methods that facilitate purchase of goods and services against the value stored on such instruments. These can be issued as smart cards, magnetic stripe cards, Net accounts, Net wallets, mobile accounts, mobile wallets or paper vouchers.

The pre-paid payment instruments that can be issued in the country are classified under three categories viz.

  1. Closed system payment instruments,
  2. Semi-closed system payment instruments and
  3. Open system payment instruments.

Closed system payment instruments:

It is issued by an entity for purchasing goods and services only from it and not from any third party. Also they don’t allow cash withdrawal or redemption.

Example: Ola Money. One can keep money in Ola wallet and use only when to pay for Ola cab rides.

Semi-closed system payment instruments:

These are used to buy goods and services, including financial services, from merchants that have a specific contract with the issuer. These too don’t allow cash withdrawal or redemption. But can be used to send money to other accounts.

Example: Paytm, MobiKwik, State Bank Buddy, Jio Money etc. One can keep money in Paytm wallet. After this he can use this money for buying products from Paytm and some other merchants who have contract with Paytm like Dominos.

Open system payment instruments:

These can be used to buy goods and services, including fund transfers at merchant locations, and also permit cash withdrawals at ATMs.

Example: All RuPay, Visa, Master-Card cards fall into this category.



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2 Thoughts to “Prepaid Payment Instruments (PPIs)”

  1. Purvi

    thanku az team 🙂

  2. Mission

    Thanku so much…

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