The Reserve Bank of India has given its final nod for introduction of a new category of semi-closed Prepaid Payment Instruments (PPI) for Mass Transit Systems (PPI-MTS) to encourage migration from cash to electronic payments.

Among other features, these instruments will be reloadable, can have a balance limit of up to Rs. 2,000, and minimum validity of six months from the date of issue. RBI had earlier issued draft guidelines for getting stakeholders’ inputs.

Facilitate purchase

PPIs are payment instruments that facilitate purchase of goods and services against the value stored on such instruments.

Semi-closed PPIs are payment instruments which are redeemable at a group of clearly identified merchant locations/ establishments which contract specifically with the issuer to accept the payment instrument. These instruments do not permit cash withdrawal or redemption by the holder. In its notification on PPI-MTS, the RBI said these instruments will be issued by the mass transit system operator after authorisation under the Payment and Settlement Systems Act, 2007.

Requirement

The PPI-MTS will necessarily contain the Automated Fare Collection application related to the transit service to qualify as PPI-MTS. Apart from the mass transit system, such PPI-MTS can be used only at other merchant outlets whose activities are allied to or are carried on within the premises of the transit system.