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Prepaid payment instruments (PPI)

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Prepaid payment instruments (PPI)

What are PPI:

  • Prepaid payment instruments are methods that facilitate purchase of goods and services against the value stored on such instruments.

  • The value stored on such instruments represents the value paid for by the holder, by cash, by debit to a bank account, or by credit card.
  • The prepaid instruments can be issued as smart cards, magnetic stripe cards, internet accounts, online wallets, mobile accounts, mobile wallets, paper vouchers and any such instruments used to access the prepaid amount.

Types of Prepaid Payment Instruments:

Closed System Payment Instruments:

  • These are payment instruments issued by a person for facilitating the purchase of goods and services.

Semi-Closed System Payment Instruments:

  • These payment instruments are redeemable at a group of clearly identified merchants that contract specifically with the issuer to accept the payment instrument.
  • These instruments do not permit cash withdrawal or redemption by the holder.

Semi-open System Payment Instruments:

  • These are payment instruments that can be used to purchase goods and services at any card-accepting merchant locations (Point of sale terminals).
  • These instruments do not permit cash withdrawal or redemption by the holder.

Open System Payment Instruments:

  • These payment instruments can be used for purchase of goods and services and also permit cash withdrawal at ATMs, Merchant Local Locations, and automated business correspondents.

Mobile Prepaid Instruments:

  • These are prepaid talk time instruments issued by mobile service providers.
  • This talk time value can also be used to purchase ‘value added service’ from the mobile service provider or third-party service providers.

Syllabus: Prelims

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