MUMBAI: The Reserve Bank of India has given Indian consumers a new option to make their daily payments at local shops and retail outlets for the purchase of daily household goods and services.
In a bid to give increased impetus to small ticket digital payments RBI on Tuesday has introduced a new Prepaid Payment Instrument (PPI) which will come with a monthly rechargeable limit of Rs 10000 and can be used only for making retail payments.
“To give impetus to small value digital payments and for enhanced user experience, it has been decided to introduce a new type of semi-closed PPI…” the central bank announced in press release on Tuesday. “These PPIs shall be used only for purchase of goods and services and not for funds transfer.”
The newly introduced payment instrument can be issued by banks and existing nonbank Prepaid Payment Instrument (PPI) players. These companies would be able to verify the credentials of customers seeking to open their Prepaid Payment Instrument (PPI) accounts using an OTP sent to a user’s verified mobile number and a digital identification document recognized by the Department of Revenue, the banking regulator said.
“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) listed in the ‘Master Direction – Know Your Customer (KYC) Direction,” according to the central bank.
This will come as a boost especially for wallet companies such as Paytm and Phonepe that have reeled due to high costs of KYC compliance since the Supreme Court denied them permission to access Aadhar database to complete full KYC authentication.
The PPI can be used for a monthly limit of Rs. 10000 and the amount can only be uploaded only from bank account linked with customer’s verified mobile number. Furthermore, RBI has also fixed an annual limit of Rs 1.2 lakh that can be recharged on these accounts.
RBI governor Shaktikanta Das had spoken about the possible launch of such an instrument while making his Monetary Policy speech on December 5. The governor had emphasised on the need for a seamless, easy to issue payment instrument to increase the use of digital payments at small merchant locations where typically the failure rate of transactions are known to be high.
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