Mass Transit Systems PPI: Facilitating Seamless Public Transport Payments

The Reserve Bank of India (RBI) has amended the Master Directions on Prepaid Payment Instruments (MD-PPIs) to permit authorised banks and non-banks to issue prepaid payment instruments (PPIs) for enabling digital payments across multiple means of public transport in the country (Amendment).

The mass public transport system in India is one of the busiest in the world, catering to over 36.5 million commuters each day across the country. Allowing PPI as a payment mode for public transit users across the nation is a much-awaited transformational move by RBI, and definitely a vital step in the manifestation of India’s aspiration of becoming a truly digital economy.

Background

On 27 August 2021, RBI had issued the MD-PPIs which prescribe, among other things, the types of PPIs which banks and non-banks can issue after securing the requisite approval from RBI.

PPIs are pre-paid cards or wallets that among other things enable purchase of goods and services against the value stored in such instruments. Effective 23 February 2024, RBI has now permitted authorised banks and non-banks to issue PPIs to enable the commuters to pay for the tickets digitally across various public transport systems in the country, i.e., roadways, buses, metro, railways, waterways, tolls, and parking fees.

Key Highlights:

Conclusion

Aligned with the digital “Bharat” initiative, the Amendment is a pivotal step towards expanding the digital outreach by introducing a swift, secure, accessible, and expedient payment mode for the millions of commuters relying on public transport; and additionally, promises an inclusive digital financial ecosystem capable of replacing the traditional ticketing across brick-and-mortar counters in the country.

•  Sarthak Sarin (Partner) and Achint Kaur (Counsel)

For any queries please contact: editors@khaitanco.com