User:Brar/Prepaid Payment Instruments in India

Prepaid payment instruments (PPIs) are those which 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, internet wallets, mobile accounts, mobile wallets, paper vouchers and any such instruments which can be used to access the prepaid amount (collectively called Payment Instruments hereafter).

Categories of prepaid payment instruments
The prepaid payment instruments that can be issued in the country are classified under the four categories viz. (i) Closed system payment instruments (ii) Semi-Closed system payment instruments (iii) Semi-Open system payment instruments and (iv) Open system payment instruments.

Closed System Payment Instruments
These are payment instruments generally issued by business establishments for use at their respective establishment only. These instruments do not permit cash withdrawal or redemption.

Semi-Closed System Payment Instruments
These are payment instruments which are redeemable at a group of clearly identified merchant locations/ establishments which 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 which can be used for purchase of 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 are payment instruments which can be used for purchase of goods and services and also permit cash withdrawal at ATMs.

Mobile Prepaid Instruments
The value of prepaid talk time issued by mobile service providers can also be used for purchase of 'value added service' from the mobile service provider or third-party service providers.