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How To Get Payment Wallet License

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INTRODUCTION: -

In order to promote fast track money transfer, the Reserve Bank of India (RBI) has taken many steps. The other name of the Payment Wallet License is Prepaid Wallet License. Using a digital platform, Payment Wallet License allows its user to purchase items or to make transactions in an easy way.

Forms of Payment Wallet License are as follows: -

  • Debit Card or Credit Card
  • Internet Wallets
  • Mobile Accounts
  • Paper Vouchers

CLASSIFICATION OF PAYMENT WALLET LICENSE: -

Classification of payment wallet license is as follows: -

  • Closed system payment
  • Semi-closed system payment
  • Open system payment

CLOSED SYSTEM PAYMENT: -

Closed System Payment is a wallet that is issued to a consumer by a company to buy goods and services exclusively from that company. Example: Amazon

One can use this

  • In order to receive refunds as cashback
  • One can also do purchasing

In short, Redemption of Cash or withdrawal of cash is not permitted in closed system payment

OPEN SYSTEM PAYMENT: -

Open system payment is used for purchasing of goods and services and also allows cash withdrawal at ATM.

Example- Visa card, Master Card, Rupay card.

One can use this

  • For withdrawal of cash at ATM
  • For Payment(s) made on purchasing of goods and services by swiping the card(s)

SEMI-CLOSED SYSTEM PAYMENT: -

Semi-closed wallets refer to those wallets which can be used for purchasing goods and/or services and also permits withdrawal of cash at ATMs. Example- Paytm, Mobikwik, Freecharge, etc.

One can use it

  • For paying the affiliated merchant to purchase goods
  • For Purchasing from wallet issuer
  • For transferring money 

CRITERIA FOR PAYMENT WALLET LICENSE

  • Non-Bank Finance Companies (NBFC) and banks, who are complying with the eligibility criteria, would be allowed to issue all categories of prepaid payment instruments.
  • RBI has allowed certain banks for providing Mobile Banking Transactions. Such banks shall be allowed for launching mobile based prepaid payment instruments (mobile wallets & mobile accounts)
  • In other cases, entities would be allowed for issuing only closed system prepaid payment instruments and semi-closed system prepaid payment instruments

CAPITAL REQUIREMENT

  • Commercial Banking institutions and NBFC’s (Non-Bank Finance Companies) which are complying with the Capital Adequacy requirement laid down by the Reserve Bank of India from time-to-time shall be allowed for issuing prepaid payment instruments.
  • Except for a bank or NBFC as mentioned above, any other entity shall have minimum net owned funds of Rs 10 lakh

PROCEDURE FOR OBTAINING PAYMENT WALLET LICENSE

Procedure for obtaining a payment wallet license is as follows: -

  • A company has to be incorporated under the Companies Act, 2013, and authorized through its object clause to undertake such business.
  • An application shall be made in order to approve the license in form A.
  • RBI processed the application for its completeness. RBI also thoroughly checks and inspects by RBI.
  • Management and entity are analyzed by taking the feedback of regulators, government authorities. The applicant has to file certain “fit & proper” criteria.
  • RBI grants in-principal approval if the application is complete and satisfied by RBI and the applicant fulfills all the requirements which are valid for six months from the date of such a grant.
  • An applicant has to submit a satisfactory system audit report within the period of these 6 months to RBI. If an applicant fails to submit such report within 6 months, then approval lapses automatically
  • In cases the application is not correct as per the requirement of RBI; then without refund of the fees, the application is rejected
  • RBI grants the certificate of authorization after considering all the applications, audit reports and after fulfilling all eligibility requirements for commencing the prepaid payment business and an entity can issue prepaid wallet.
  • RBI reviews the License from time to time which is valid for 5 years from the date of issue.

DOCUMENTS REQUIRED FOR OBTAINING PAYMENT WALLET LICENSE: -

The documents required for getting the payment wallet license are as follows: -
  • Applicant Name
  • Address proof of Registered office
  • Incorporation Certificate
  • Objects of the company
  • Information about management
  • Details of statutory auditors
  • Audited balance sheet
  • Name & address of the bankers to the company.

BOOK A FREE CONSULTATION

Get help from an experienced legal adviser. Schedule your consultation at a time that works for you and it's absolutely FREE.

Author
Shamshad Alam
Experienced Digital Marketer with a demonstrated history of working in the internet industry. He likes to write about the latest technology trends, Skilled in Digital Marketing likes. Search Engine Optimization, SMO, SEM, PPC, Content Writing, and, Designing, etc.