Closed System Payment Instruments are payment instruments issued by a person/entity for facilitating the purchase of goods and services from him/it. These instruments do not permit cash withdrawal or redemption. Being very simple type, these instruments cannot be used for payments and settlement for third party services and hence these PPI are not classified as payment systems. The implication is that RBI approval is not required for issuing the closed system payment instruments. In the real world, closed system payment instruments include bonus point like wallets issued by web portals for online purchases /shopping for their customers. Mobile prepaid cards also come under this category.
