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In a significant move aimed at promoting digital transactions and enhancing convenience for commuters, the Reserve Bank of India (RBI) has announced that prepaid payment instruments (PPIs) managed by both banks and non-banking institutions can now be utilized for making payments across various public transport systems.
The RBI, in a notification issued on Friday, highlighted the importance of digital modes of payment in ensuring convenience, speed, affordability, and safety for commuters availing themselves of public transport services. This decision is expected to streamline payment processes and offer greater flexibility to passengers across the country.
The directive, which comes into effect immediately, marks a notable step towards facilitating seamless transactions in public transportation networks. By permitting authorized bank and non-bank PPI issuers to issue PPIs for transit services, the RBI aims to cater to the diverse needs of commuters while promoting the adoption of digital payment solutions.
Prepaid payment instruments, as defined by RBI’s ‘Master Directions’ issued in 2021, serve as instruments facilitating the purchase of goods and services, financial services, remittance facilities, etc., against the stored value within them. These instruments are classified into two categories: small and full-KYC (Know Your Customer).
Small PPIs, which require minimal information from the holder, are designed exclusively for procuring goods and services without options for fund transfer or cash withdrawal. On the other hand, full-KYC PPIs involve a comprehensive KYC process and allow fund transfer and cash withdrawal, in addition to facilitating purchases.
The inclusion of PPIs in public transport payment systems aligns with the broader agenda of promoting cashless transactions and fostering financial inclusion. It is expected to provide commuters with a wider array of payment options, thereby reducing dependence on traditional cash-based transactions.
With the increasing digitization of payment services and the growing emphasis on contactless transactions, the RBI’s decision to allow the use of prepaid instruments for public transport payments underscores its commitment to modernizing payment infrastructure and promoting a cashless economy.
As commuters navigate through various modes of public transportation, the availability of PPIs for payment purposes is set to offer greater convenience and efficiency, ultimately enhancing the overall commuter experience. This initiative is poised to play a pivotal role in shaping the future of digital payments in India’s public transport ecosystem.
Sources By Agencies
