In a significant stride towards a cashless and convenient future, the Reserve Bank of India (RBI) has amended the Master Direction on prepaid payment instruments (PPI), allowing both banks and non-bank issuers to extend these instruments for public transport usage. The decision, effective immediately, is poised to revolutionize the way commuters engage with digital payments across various public transport systems.
The RBI underscored that this strategic move is aimed at bolstering the convenience, speed, affordability, and safety of digital payment methods for individuals utilizing public transport services. The Master Directions on PPIs, initially introduced in 2021, serve as guidelines for instruments that facilitate the purchase of goods and services, financial transactions, and remittance facilities based on stored value.
There are two categories of PPIs that require RBI approval – “Small PPIs” and “full-KYC PPIs.” Small PPIs, issued by both banks and non-banks, necessitate minimal details of the holder and are exclusively designed for purchasing goods and services, prohibiting funds transfer or cash withdrawal. On the other hand, full-KYC PPIs undergo the Know Your Customer (KYC) process, granting users the ability to make purchases, transfer funds, or withdraw cash.
The recent amendment broadens the scope of PPI issuance to include public transport services, signaling a concerted effort to digitize payment methods in the transportation sector. It is noteworthy that the RBI had earlier permitted non-banking PPI issuers to issue e-RUPI vouchers in June of the preceding year, distributed as QR codes or SMS on the beneficiary’s phone.
RBI Governor Shaktikanta Das, at that time, expressed optimism about these measures making e-RUPI digital vouchers more accessible, thereby contributing to the broader adoption of digital payments across the country.
This regulatory shift is expected to usher in a new era of seamless and secure digital transactions for commuters, aligning with the broader vision of a digitally empowered and financially inclusive India.
