Prepaid Instruments License
                     Prepaid 
Instruments 
License 
- By Himani Srivastava

Prepaid Payment Instruments
Prepaid payment instruments are methods that facilitate the purchase of goods and services 
against the value stored on such instruments. The value stored on such instruments represents 
the value paid for by the holder, by cash, by debit to a bank account, or by credit card.
The prepaid instruments can be issued as smart cards, magnetic stripe cards, internet accounts, 
online wallets, mobile accounts, mobile wallets, paper vouchers and any such instruments used to 
access the prepaid amount.
Categories of Prepaid Payment Instruments
:The prepaid payment instruments that can be issued in the country are classified under the following 
categories:
Closed System Payment Instruments
These are payment instruments issued by a person for facilitating the purchase of goods and services 
from him/her/it.
Semi-Closed System Payment Instruments
These payment instruments are redeemable at a group of clearly identified merchants that contract 
specifically with the issuer to accept the payment instrument. These instruments do not permit cash 
withdrawal or redemption by the holder.




Semi-open System Payment Instruments
These are payment instruments that can be used to purchase goods and services at any card-accepting merchant locations (Point of sale terminals). 
These instruments do not permit cash withdrawal or redemption by the holder.
Open System Payment Instruments
These payment instruments can be used for the purchase of goods and services and also permit cash withdrawal at ATMs, Merchant Local Locations, 
and automated business correspondents.
Mobile Prepaid Instruments
These are prepaid talk time instruments issued by mobile service providers. This talk time value can also be used to purchase 'value-added service' from 
the mobile service provider or third-party service providers.
Eligibility
Banks and Non-Banking Financial Companies (NBFC), 
who comply with the eligibility criteria, would be permitted 
to issue all categories of prepaid payment instruments.
Only banks permitted to provide Mobile Banking 
Transactions by the Reserve Bank of India shall be 
permitted to launch mobile based prepaid payment 
instruments.
Other entities would be permitted to issue only closed system 
prepaid payment instruments and semi-closed system prepaid 
payment instruments.
Mobile Service Providers are permitted to issue mobile 
prepaid value. In addition to talk-value, the use of such 
prepaid value as a payment instrument shall be restricted to 
the purchase of only such value-added digital contents or 
services for use on mobile phones. The use of mobile prepaid 
value for the purchase of other goods and services shall not 
be permitted.

Closed System Payment Instruments
These payment instruments are generally issued by 
the business establishment for use within their 
premises only. They do not permit cash withdrawal. 
The max limit is Rs. 5000/- Example- Coupons issued 
by corporates to employees for use within the 
establishment
Semi-Closed System Payment Instruments
These payment instruments are redeemable at clearly 
identifiable merchants/locations which are in contract 
with the issuer to accept the payment instrument. 
These do not permit cash withdrawal. Example - 
Paytm.
Semi-Open System Payment Instruments
These are payment instruments that can be used for 
the purchase of goods and services at any 
merchant/location which accepts cards (POS 
terminals). These do not permit cash withdrawal or 
redemption.

Open System Payment Instruments
These are payment instruments that can 
be used for the purchase of goods and 
services. They also permit cash withdrawal 
at ATMs.
Thank You