RBI and KYC compliance for prepaid cards

RBI and KYC Compliance for Prepaid Cards

Prepaid Visa cards are regulated financial instruments, so they must follow the guidelines issued by the Reserve Bank of India. These rules maintain security, prevent misuse, and create clarity for both issuers and users. Understanding the compliance structure helps organisations use prepaid cards responsibly for payouts, rewards, and expenses.

Why RBI Regulations Matter

RBI provides a clear framework for how prepaid cards should be issued and used. This structure protects users, reduces fraud risks, and brings consistency across all prepaid instruments in the country.

• Clear spending limits
• Defined onboarding steps
• Transparent loading and usage rules
• Security requirements for both online and offline transactions

These guidelines help organisations use prepaid cards without facing compliance challenges.

Types of Prepaid Cards Under RBI Rules

Prepaid cards fall under different categories based on how much value they can hold and the level of KYC completed by the user.

• Minimum KYC cards: Lower limits with basic KYC
• Full KYC cards: Higher limits and broader usage

Each type is designed for different scenarios, from small payouts to large programme based usage.

KYC Requirements for Prepaid Cards

KYC verification is required to establish the identity of the cardholder. The level of KYC affects the balance limit and usage capabilities.

Minimum KYC

• Requires basic identity details such as name and mobile number
• Lower transaction limits
• Suitable for small rewards or controlled payouts

Full KYC

• Requires valid identity documents such as Aadhaar, PAN, or other approved documents
• Higher loading and spending limits
• Useful for corporate expenses, larger incentive programmes, and extended usage

Completing full KYC unlocks a wider range of capabilities for the cardholder.

Key RBI Rules That Affect Organisations

For companies using prepaid Visa cards at scale, certain rules must be followed during issuance and usage.

• Preloaded amounts cannot exceed the permitted limit based on KYC status
• Reloadable features depend on card category
• Funds must be loaded through approved channels only
• Issuers must keep proper records of payouts
• Inactive cards may have specific rules for balance handling

These conditions help maintain structured and compliant distribution for businesses.

Security Measures Required Under RBI Guidelines

Security controls play a major role in prepaid card usage. RBI guidelines focus on protecting user transactions and preventing fraudulent activity.

• Mandatory OTP for online payments where applicable
• Secure encryption for card data
• Protocols for dispute handling
• Clear communication regarding card validity and balance

These safeguards help cardholders use prepaid cards with confidence.

Why Compliance Supports Smooth Usage

RBI and KYC rules give prepaid cards a solid structure, allowing businesses to use them comfortably across teams, partners, and external audiences. By following these guidelines, organisations maintain transparency, reduce administrative risks, and support safe digital transactions.

A clear understanding of these rules helps companies introduce prepaid Visa cards across reward programmes, influencer payouts, and expense systems with steady and reliable operations.