PPIs are financial tools like mobile wallets (e.g., PhonePe Wallet), gift cards, or smart cards that allow customers to load money in advance and use it for transactions, like to buy things or pay for service.
PPIs are regulated by the Reserve Bank of India (RBI) under the Payment and Settlement Act, 2005, to ensure the safety of users’ money.
How does it work?
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At first the money is loaded into the PPI – For example, customer added ₹1,000 to PhonePe Wallet or buy a ₹500 gift card.
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The money is stored in that wallet or card – It’s like keeping cash in a digital purse.
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The stored money can then be used to make payments, such as buying groceries, paying bills, booking tickets, or shopping online — all without needing a bank account or credit card.
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Once the money is used, can be reloaded again. More money can be added anytime and can be used regularly.
PPIs are useful as we need not to carry cash. It’s easy to use especially for small, everyday payments. It helps with budgeting as we only spend what we load. It can be used by anyone especially for people without bank accounts.