HOW TO REGISTER PREPAID PAYMENT CARD ISSUER

Prepaid Payment Instruments

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Prepaid Payment Instruments (PPI), popularly called Prepaid Cards or Prepaid Payment Cards, are the instruments used to make electronic payment for purchase of goods and services. Prepaid Payment Instruments offers great advantage over carrying liquid cash in terms of convenience and security.

Types of PPI issuers

  • Closed System PPIs – Used for purchase of goods and services only from the issuing entity – approval/authorization from RBI is not required
  • Semi-closed System PPIs – used for purchase of goods and services only from identified merchant locations / establishments – approval/authorization from RBI is required
  • Open System PPIs – used for purchase of goods and services from any merchant and can withdraw cash – it can be issued only by banks.

Prepaid Payment Instruments can be issued by both bank and non-banking entities. This article will be primarily focused on non-banking entities issuing Semi-closed System PPIs.

Pre requisites for issuing Prepaid Payment Instruments

  • It should be a company incorporated in India and registered under the Companies Act 1956 / Companies Act 2013
  • Main objects of Memorandum of Association (MOA) of the company shall cover the proposed activity of operating as a PPI issuer
  • It should have a minimum positive net-worth of Rs. 5 crore
  • It should have authorization of RBI under Payment and Settlement Systems Act, 2007

Essential Compliance’s of Prepaid Payment Instruments issuers

  • An in principle approval having a validity of six months shall be initially issued by RBI.
  • After submission of satisfactory System Audit Report and net worth certificate, RBI will grant final Certificate of Authorisation, which will be valid for 5 years.
  • PPI issuer shall achieve and maintain a minimum positive net-worth of Rs. 15 crore from the third financial year from the date of receiving final authorization.
  • PPI issuers shall comply with KYC, Anti-Money Laundering (AML), Combating Financing of Terrorism (CFT) guidelines issued by RBI.

For more details visit https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=11566

Semi-closed Prepaid Payment Instrument (PPI) with minimum details 

Semi-closed Prepaid Payment Instrument (PPI) with minimum details RBI has introduced new PPI, which requires minimum details from customers with a limit of Rs.10,000/-. Its key features are:

  • The minimum details shall necessarily include a mobile number verified with One Time Pin (OTP) and a self-declaration of name and unique identity / identification number of any ‘mandatory document’ or ‘officially valid document’ (OVD).
  • These PPIs shall be reloadable in nature and issued in card or electronic form. Loading / Reloading shall be only from a bank account.
  • The amount loaded in such PPIs during any month shall not exceed ₹ 10,000 and the total amount loaded during the financial year shall not exceed ₹ 1,20,000.
  • The amount outstanding at any point of time in such PPIs shall not exceed ₹ 10,000.
  • These PPIs shall be used only for purchase of goods and services and not for funds transfer.
  • The features of such PPIs shall be clearly communicated to the PPI holder by SMS / e-mail / post or by any other means at the time of issuance of the PPI / before the first loading of funds.

For more details: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11766&Mode=0

Registering your company for carrying out the business of issuing PPI is an easy process. Recently, Government has simplified the procedure for registering your company.

Procedure for registering your company

  • Obtain Digital Signature Certificate (DSC)
  • Checking Name Availability          
  • Preparation of Memorandum of Association, Articles of Association, Declarations, Affidavits and other documents
  • Filing forms for incorporating company along with the application for PAN, TAN, ESI & EPF of the Company
  • Make Payment for application for registration along with stamp duty based on the authorized capital of the proposed company and the fees for PAN and TAN
  • Obtaining Certificate of Incorporation
  • Post Incorporation works

Basic Documents required for registering your company.

For Digital Signature

  • Pan Card and Address proof of the applicants (Passport in case of foreign national)
  • Passport Size Photograph of the Applicant

For Director Identification Number

  • Pan Card and Address proof of the proposed Directors (Passport in case of foreign national)
  • Passport Size photo of proposed director
  • Personal details of the proposed director

For Company Registration

  • Proposed name of the company
  • Electricity Bill/ Mobile Bill/ Telephone Bill/ Gas bill (not older than two months) of the proposed registered office of the company

If you need assistance in registering your PPI company, contact us

Sreenu T, is a fellow member of The Institute of Company Secretaries of India and holds post graduate degree in Commerce and LLB. He is currently pursuing his profession as a practicing company secretary in Kerala.

He is fond of assisting entrepreneurs in setting up their business and ensuring good governance. Besides consulting he is a faculty in the field of Financial Management, Forex, Goods and Services Tax and Music.
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