About Prepaid Instruments

Overview - Prepaid cards, features, business use-cases

What are Prepaid Cards?

A prepaid card resembles a debit or credit card, but holds a finite amount of funds and is not directly tied to a bank account or line of credit. The amount is contained in a digital wallet for each user. These cards typically can only be used for purchases under or equal to the card balance. Purchases of goods and services can be online or point of sale. Certain cards can be used for cash withdrawals and fund transfers.
Falcon provides prepaid cards with dynamic spend controls to optimise cash flow and mitigate payment fraud.

Who can issue prepaid cards?

Banks and Non-Bank entities approved by the Reserve Bank of India can issue prepaid cards to users after completion of the identification and verification process (KYC)
PPIs (Prepaid Instruments) are monitored under the broad umbrella of payment instruments by RBI.

Types of Prepaid Cards/Instruments

There are two different types of prepaid instruments - Closed and Open PPIs

Closed PPIs are issued by an entity for the purchase of goods and services from that specific entity only and cannot be used for any other payment or settlement to third-party services. It is not classified as a payment instrument nor is it authorised /regulated or governed by RBI.

Open PPIs are issued by Bank or Non Bank entities and are directly governed and regulated by RBI. These instruments are used for purchases of goods and services within an open network scheme. Hence settled through payment channels. These instruments can be used for cash withdrawals, fund transfers, POS, or online/e-commerce transactions.

Classifications of Prepaid Cards

As per RBI Master directions, there are two classifications of Prepaid cards - Small PPI and Full KYC PPI.
Small Prepaid cards/instruments: These prepaid cards/instruments can be issued by Banks or Non-Banks after verification of the user registered with minimum details. These Prepaid cards can be used for purchases of goods and services at POS or Ecommerce platforms. These are open network cards that can be used at any merchant location or establishment through a payment aggregator or payment gateway and merchants with specific contracts for bill payments, phone recharge, etc. However, funds transfers or cash withdrawals are not permitted for such prepaid instruments.

There are two different Small PPI classifications as per RBI Master directions:
Cash loading Small PPI and No-Cash Loading. For Cash loading Small PPI instruments there is a mandatory KYC to be completed within 24 months.

Full KYC Prepaid cards/instruments: These prepaid cards/instruments can be issued by Banks or Non-Banks after complete verification (Know your customer) of the user registered. These prepaid cards can be used for purchases of goods and services at POS, e-commerce platforms, Funds transfers, and cash withdrawals. These are also open network cards that can be used at any merchant location or establishment through a payment aggregator or payment gateway and merchants with specific contracts for bill payments, phone recharge, etc.

Small PPI and Full KYC PPIs are General purpose reloadable cards(GPR) which as the name suggests, these cards can be loaded, reloaded, and used until the card expires OR closed by the user voluntarily at any given point in time.

Limits and loading features for GPR cards

Small PPIs: Both types of Small PPIs can be reloaded and can be used only for the purchase of goods and services. Cash withdrawal and funds transfer is not permitted for Small PPIs. Loading and spending limits are as indicated below:

Apart from the Small PPIs and Full KYC PPIs there are two other special categories of Prepaid cards as per RBI Master direction - Gift cards PPIs (GC) and PPIs for Mass Transit Systems (PPI-MTS)

Gift cards: GCs are issued with a specific stored value and loaded only at the time of issuance. Maximum amount to be stored or loaded into GCs is Rs. 10,000. These cards cannot be reloaded, refunded/closed. The amount stored has to be utilised completely before the expiration date on the card specified. Only POS and Ecommerce transactions are allowed. Cash withdrawals or funds transfers are not permitted.

PPIs for Mass Transit Systems(PPI-MTS): These PPIs are issued by MTS operators. Apart from the MTS, these PPIs can be used only at merchants whose activities are allied/related to / are carried on within the premises of the transit system. These cards can be reloaded and the maximum outstanding amount cannot exceed Rs. 3000 at any point in time. There is no Cash-out or Refund or Funds transfer permitted. Revalidation can be requested by the PPI holder and AFA/2FA is not mandatory for transactions performed using these cards.

Real-world Examples

General purpose reloadable cards - Falcon offers the following features and types of GPR Cards to suit the needs of the corporates/individuals/institutions.

1. Co-Branded GPR Wallets: Falcon APIs provides customised Wallets to complete KYC for the user, manage Loading/reloading within the limits as prescribed by RBI, authorisation rules, user-managed controls for cards, Channel based limits, Virtual and Physical cards, Manage spending, funds transfers, UPI on prepaid cards, etc. Falcon provided data and reports to the partners to view transaction history and view previous refunds/reversals as well.
2. GPR Multi wallet: Partners will be able to issue GPR cards for different purposes for their employees, clients, agents, or users like Meal Cards, Employee Travel cards/wallets, and also Open Wallets. Meal cards, travel cards, and fuel cards can be single or multi-pouch wallets with MCC restrictions. There is a provision with Falcon to block certain types of MCCs based on the requirements of the Partners. Apart from this, we will be able to configure fees and surcharges in order to manage the authorisation and settlement differences on certain types of transactions. Open wallets /cards can be used on any Open network like Rupay/Visa or Mastercard. These cards can be used in any merchant outlet, e-commerce websites, etc.
3. Gift cards: Falcon APIs are built in order to issue both Virtual and physical gift cards. These cards can be easily loaded and distributed to employees, family, and friends.

Get started with prepaid cards

Create single and multi-use cards- Get more out of prepaid cards by allowing them to be used only once, or multiple times, depending on your use case.
Configure cards with dynamic spend controls and Just-in-Time Funding - Define spend controls that govern how, when, and where your cards are used and fund them in real-time upon authorization.
Tokenize for digital wallets - Provision prepaid cards into digital wallets(virtual cards or wallets) to increase their adoption and mitigate payment fraud.
Instantly issue cards - Prepaid cards can be issued instantly to speed up the time to value and get new users onboarded quickly.
Monitor card activity - Access real-time data to view transaction information, and account activity, and optimise your program.
Analytics/reportings - Access historic data to analyse the spend, load, and merchant-specific patterns in order to plan and executive offers.