The growth of prepaid payment instruments (PPIs) has not been encouraging despite favourable regulatory regime from the central bank, the Reserve Bank of India (RBI) said on Wednesday.
According to RBI data, the average issuance of PPIs during the previous financial year was 48.96 million, with a peak issuance of 57.46 million in July 2011. “Available data indicates the growth of the issuance of PPIs in India has and continues to be sluggish...the volume of transactions (2.3 per cent) and value transacted (2.5 per cent) with PPIs as a percentage of total card transactions is also very marginal," said G Padmanabhan, executive director, at the Financial Inclusion and Digital Payments Conference organised by the Internet and Mobile Association of India.
He said RBI has noticed a particular issuers has issued PPIs of Rs 1 each in large numbers. He said the central bank can act as a catalyst building an enabling environment for the players of the payment industry, but it is the issuers who have to hit the ground running. He called on industry associations to focus on achieving the required scale of operations.
“Significant changes are required in the technology and business model of non-bank PPI issuers to be accepted at the point of sale terminals, they need to adhere to the form factor specification and connectivity to their switch,” Padmanabhan said.
TYPES OF PPIS |
|
He said though the requests have been received by the industry to relax KYC (know you customer) norms, but in absence of payment trails systems in some cases, RBI prefers to take a cautious approach.
The Payment and Settlement Systems Act, 2007, allows nonbanking entitiesto issue prepaid payment cards after being duly authorised by RBI.
Prepaid cards are issued by banks as well as non-banking companies and are used to reduce day-to-day payments in cash.