New Delhi: The Reserve Bank of India’s (RBI) proposal to introduce a prepaid payment instrument (PPI) for transactions up to Rs 10,000 on goods and services will give good competition to GooglePay, Paytm, PhonePe etc.
At present, there are three kinds of PPIs allowed by the RBI—closed system PPIs, semi-closed system PPIs and open system PPIs. A PPI can be used to buy goods as well as transferring/sending money to a friend/family etc.
“PPIs have been playing an important role in promoting digital payments and bringing in the new PPI will further facilitate its usage. To facilitate its (PPI) usage, it is proposed to introduce a new type of PPI which can be used only for purchase of goods and services up to a limit of Rs 10,000,” an RBI statement said. In the last few years, the payment modes in India have changed drastically with online payments replacing traditional payments by cash. The digital cash transaction system market has been dominated by the government’s UPI (unified payments interface) and applications like Google Pay, Paytm, Mobikwik. Individual banks have also introduced their payments applications like HDFC’s PayZapp and SBI’s Yono.
Reports suggest that digital payments in India are estimated to double in terms of value. In 2018-19, it was Rs 1,630 trillion which is expected to go beyond Rs 4,055 trillion by 2023-24. The total number of UPI transactions was 0.96 billion in September and it went to 1.15 billion in October.
The loading and reloading for the proposed RBI’s instrument can be done through a bank account only and can be used for digital payments only like bill payments, merchant payments etc. The PPI can be issued on the basis of essential minimum details sourced from the customer. According to the RBI, it will give instructions in this regard by 31 December.
The banking regulator has also said that it would allow the International Financial Service Centre Banking Unit (IBUs) to open foreign currency current accounts of their corporate borrowers in order to facilitate ease of operations.