1. Prepaid Payment Instruments
2. Classification of Pre-paid payment instruments
2.1 Closed system payment instruments
2.2 Semi-closed system payment instruments and
2.3 Open system payment instruments.
3. Settlement Of Payments
Prepaid Payment Instruments
Prepaid instruments square measure a convenient cashless payment technique and facilitate e-payment for products or services purchased via the net or mobile. Recently, electronic-based transactions square measure registering extraordinary growth in Bharat. The restricted accessibility and accessibility of bank accounts to a considerable population of the country has paved means for the expansion of electronic payment instruments. Specifically, electronic wallets are getting the well-liked electronic payment mode for each customer and retailer. The benefit of exploiting electronic wallets as a substitute to physical wallets has created electronic wallets in a concert of the foremost convenient ways that of creating payment through the employment of mobile phones.
Classification of Pre-paid payment instruments
Under the PSS Act, the run has allowable the issuing of such instrument which may be wont to access the paid quantity to settle dealing, that’s to mention paid payment instruments, within the country and has additionally set down the means that to settle transactions.
The guidelines outline the term ‘Pre-paid payment instruments’ as payment instruments that facilitate the purchase of products and services, together with funds transfer, against the worth hold on such instruments. The worth hold on such instruments represents the worth acquired by the holders by money, by debit to a checking account, or by Mastercard. The pre-paid instruments will be issued as sensible cards, mag tape cards, web accounts, web wallets, mobile accounts, mobile wallets, paper vouchers, and any such instrument which may be wont to access the pre-paid quantity. The pre-paid payment instruments which will be issued within the country square measure classified underneath 3 classes viz.
- Closed system payment instruments
- Semi-closed system payment instruments and
- Open system payment instruments.
Closed system payment instruments square measure used once the products or services square measure no inheritable directly from the entity that problems this instrument. They are doing not enable money withdrawal or redemption. Like just in case of “Ola money” or “recharge” notecase, wherever the quantity therefore attributable will be utilized just for either travel or recharging of mobile severally.
Mobile wallets square measure classified underneath semi-closed system payment instruments. The definition of semi-closed system payment instruments, as per the rules, is as reproduced below:
Semi-Closed System Payment Instruments: These square measure payment instruments which may be used for the purchase of products and services, together with money services at a bunch of clearly known businessperson locations/ institutions that have a selected contract with the institution to just accept the payment instruments. These instruments don’t allow money withdrawal or redemption by the holder.”
It will be inferred from the same definition that these square measure payment instruments that square measure redeemable at a bunch of clearly known businessperson locations/ institutions, that contract specifically with the institution to just accept the payment instruments. These instruments don’t allow money withdrawal or redemption by the holder.
As per the same definition, electronic wallets, within the nature of semi-closed payment instruments will be used for availing money services additionally. A read will be taken that money services include services like availing funding facility and therefore the reimbursement of such facility, wherever the loaner features a specific contract with the institution of the paid payment instrument.
Open system payment instruments: Only the banks square measure allowed to issue open-system payment instruments which may be used for the purchase of products and services and additionally allow money withdrawals from ATMs. These square measure payment instruments which will be used at any card-accepting businessperson locations (point of sale terminals) and additionally allow money withdrawal from ATMs. Examples of those square measure credit cards, debit cards, etc.
Settlement Of Payments
Banks and paid payment instrument issuers have additionally been facilitating the employment of electronic modes by customers for payments to merchants. Here, the intermediaries like aggregators and payment entree service suppliers, together with e-commerce and m-commerce service suppliers, square measure taking part in a significant role for facilitating the employment of electronic mode of payment. The arrangement, involving such intermediaries, involves the flow of funds as mentioned herein below:
A lot of risks are concerned within the same arrangement, for the shoppers and therefore the merchants, as any delay within the transfer of the funds by the intermediaries to the merchant’s account can impact the payment system as an entire. it’s important to confirm that the interests of the shoppers square measure safeguarded which the payments created by them square measure punctually accounted for by the intermediaries receiving such payments and later remitted to the accounts of the merchant’s World Health Organization have provided the products and services while not undue delay. Consequently, the run has thought-about it necessary to border specific tips and directions for the safe and orderly conduct of those transactions.
Intermediaries like aggregators and payment gateways that facilitate payment services, tho’ not licensed by run underneath the PSS Act, 2007 square measure but needed to route their transactions solely through a nodal account opened with a bank underneath the same tips. The allowable credits/debits in these accounts square measure provided herein below:
- Payments from varied persons towards the purchase of goods/services.
- Transfers from different banks as per pre-determined agreement into the account, if this account is that the nodal checking account for the mediator.
- Transfers representing refunds for failed/disputed transactions.
- Payments to numerous merchants/service suppliers.
- Transfers to different banks as per pre-determined agreement into the account, if that account is that the nodal checking account for the mediator.
- Transfers representing refunds for failed/disputed transactions.
- Commissions to the intermediaries. These amounts shall be at pre-determined rates/frequency.