RBI allows banks, non-banks to issue PPIs for public transport systems

The Reserve Bank of India (RBI) on Friday allowed banks and non-banks to issue prepaid payment instruments (PPIs) for public transit services such as metro, buses, rail, waterways, tolls, and parking.

The regulator amended the guidelines for PPIs for mass transit systems (MTS). It said such PPIs could be issued without a “know your customer” (KYC) verification of the holder.

“Public transport systems across the country cater to a multitude of commuters on a daily basis. To provide convenience, speed, affordability, and safety of digital modes of payment to commuters for transit services, it has been decided to permit authorised bank and non-bank PPI issuers to issue PPIs for making payments across various public transport systems,” the central bank said.

PPIs are instruments that facilitate purchases of goods and services, financial services, remittance facilities, among others, against the value stored in them.

In the latest amendment, the RBI said PPIs for the “Mass Transit System” (MTS) would contain the “Automated Fare Collection” application related to transit services, toll collection, and parking.

The outstanding amount will not exceed Rs 3,000, the regulator said. While these instruments can be reloaded, withdrawing cash, refund, or fund transfer will not be permitted in PPIs.

Before the Friday amendment, a PPI-MTS was issued by operators of the MTS after receiving authorisation.

“Earlier, the option to issue a PPI-MTS was allowed to MTS operators. For example, the Delhi Metro Rail Corporation (DMRC) was an MTS operator and could issue a PPI for its metro transit services. However, now, banks and non-banks can issue them,” said an official of a payments organisation. “This is a welcome move. It marks a pivotal moment in our journey towards modernising transit systems. By embracing digital payment solutions, we not only enhance convenience but also pave the way for a more efficient, accessible, and forward-looking transportation experience for all,” said Bipin Preet Singh, co-founder and chief executive officer, MobiKwik.

PPIs that require RBI approval before issuance are classified into two types. These include small PPIs and full-KYC PPIs. Small PPIs are issued by banks and non-banks after obtaining minimal detail on the holder. These are authorised only for purchasing goods and services. Fund transfer or cash withdrawal from such PPIs is not allowed.

Full-KYC PPIs are issued by banks and non-banks after completing the KYC of the PPI holder. These can be used for purchasing goods and services, funds transfer or cash withdrawal.