It is learned that the Prepaid Payment Instruments (PPI) have stopped customer transactions on their prepaid cards in reaction to the notification from the Reserve Bank of India (RBI).
In reaction to recent RBI guidelines that prohibited non-bank PPIs from loading credit, startups such as Jupiter, EarlySalary and KreditBee have reportedly halted customer transactions on their prepaid cards, according to media reports.
According to media reports, fintech companies have temporarily halted their prepaid line of credit offer to avoid attracting an RBI penalty on partner companies.
It is possible that some partner banks of these card-based fintech companies will also stop supporting their banks’ PUPs on these platforms after seeking clarification from the RBI.
It should be noted that banking PUPs include players such as HDFC Flexipay, ICICI PayLater, HDFC Payzapp, SBI YONO and ICICI Pockets, among others. On the other hand, non-bank PUPs are independent online wallets – Paytm, PhonePe, Google Pay, MobiKwik, Oxigen, Ola Money and Amazon Pay, among others.
Earlier, there were reports that fintech players were considering approaching RBI regarding its notification for non-bank PPI issuers. They are aimed at obtaining clarification from the central bank on the notification issued recently by the latter.
The RBI has issued a notification to non-bank fintech players stating that prepaid payment instruments (PPI) cannot be loaded with lines of credit.
“The PPI-MD (PPI-master direction) does not allow the loading of PPI from credit lines. Such a practice, if followed, must be stopped immediately. Failure to comply in this regard may result in criminal prosecution under the provisions contained in the Payments and Settlement Systems Act 2007,” the central bank’s notice to non-bank PPI issuers reads.