| Point | Detail |
|---|---|
| Point 1 | Minimum KYC is the lighter tier |
| Point 2 | Full KYC requires a stronger identity check |
| Point 3 | The RBI PPI guidelines sit behind all of this |
| Point 4 | Wallet onboarding is a sequence of steps that must be designed |
| Point 5 | From a documentation perspective, a BA should produce a KYC requirements pack |
Wallet KYC: Minimum KYC, Full KYC and RBI PPI Rules
What you will learn
Your objective. By the end of this lesson, you will be able to explain wallet KYC: minimum KYC, full KYC and RBI PPI rules. Minimum KYC is the lighter tier, designed to let a customer start using a wallet quickly with only a mobile number verified through an OTP and basic details such as name and date of birth.
Why it matters. This matters because card payments are the highest-volume payments most banks process, and the four-party model decides who pays whom, when, and what happens when it goes wrong.
Chapter objective: Learner explains digital wallets and point-of-sale systems, including token provisioning, NFC, QR payments, and settlement, and designs a wallet payment flow for a retailer. Learner demonstrates this skill using realistic banking examples, explaining each step clearly and using correct terminology throughout.
Key learning points
- Minimum KYC
- Full KYC
- RBI PPI guidelines sit behind all
- Wallet onboarding
- BA should specify velocity
- Level of detail
Key terms
Exception: A payment that cannot be processed normally and needs manual handling, investigation or repair. Exceptions arise from missing data, failed screening, account errors or system faults.
Issuer: A bank or licensed institution that issues payment cards to customers and holds their accounts. It authorises transactions, debits cardholder accounts, and manages credit limits and fraud controls.
Refund: A repayment of funds to a customer after a payment fails, is cancelled or is disputed. In card payments a refund returns money to the cardholder account.
Regulatory comparison showing Wallet KYC: Minimum KYC, Full KYC and RBI PPI Rules.
Practise this lesson
Exercise
Decide what the screening or monitoring outcome should be for the scenario in this lesson.
Use the lists, rules and thresholds in this lesson.
- What to do. State whether the payment is stopped, held, frozen or released, and what must be recorded for audit.
Correct result. A true match against a sanctions list stops the payment. A false positive is cleared with a reason recorded. An alert that is escalated becomes a case, and a case that meets the threshold becomes a suspicious activity report.
Why. Screening is a control, not a suggestion. A missed true match is a regulatory breach, and an unexplained clearance is an audit finding.
Check your understanding
Practice question
Which of the following best describes wallet KYC: minimum KYC, full KYC and RBI PPI rules?
Takeaway and next step
What to remember
Each step must have a defined timeout, a retry limit and a help message, and the system must never create a usable wallet before the OTP verification succeeds.
Follow 10,000 rupees through every stage, from instruction to beneficiary credit, and note where it can stop.
Open the Payment Lifecycle Simulator →
Builds on "Wallet Transactions: Load, Pay, Send and Withdraw".
Transcript and full text
Show transcript
Minimum KYC is the lighter tier, designed to let a customer start using a wallet quickly with only a mobile number verified through an OTP and basic details such as name and date of birth. The customer can load and spend money, but the limits are deliberately low. Historically the monthly load and spend limits for minimum KYC wallets were around 10,000 rupees, and the wallet cannot be used for fund transfers to another person or for cash withdrawal in most cases. The wallet must also be revalidated periodically, and if the customer does not complete full KYC within the permitted period, the issuer must restrict or close the wallet. A BA should document the exact limits as configurable values, not as hard coded numbers, because the regulator revises them from time to time. Full KYC requires a stronger identity check, usually an official document such as a PAN card and an address proof, plus a video KYC session or an in person verification where the customer shows the original document and confirms their identity on camera. Once full KYC is complete, the wallet limits rise sharply. The customer can hold a larger balance, often up to 2,00,000 rupees in a full KYC PPI, can transfer money to other wallets and bank accounts, and can withdraw cash where the product supports it. The KYC record must be stored with the document type, the document number, the verification date, the verification method and the expiry date of the document. A BA must also specify what happens when a document expires, when a name mismatch is found, and when a customer fails video KYC twice. The RBI PPI guidelines sit behind all of this, and a BA working on a wallet project should know the main rules rather than guessing them. The guidelines define who can issue a PPI, the capital requirements for the issuer, the need for a nodal or escrow account with a bank, the KYC tiers, the interoperability requirements, and the customer grievance and refund timelines. They also require the issuer to display fees clearly, to provide a transaction history, and to protect customer funds so that the money in the pooled account cannot be used for the issuer business expenses. A BA should maintain a compliance traceability matrix that maps every regulatory clause to a requirement, a design element and a test case, so that an audit can prove the system was built to the rule rather than to a developer interpretation. Wallet onboarding is a sequence of steps that must be designed as a single smooth journey with clear failure handling at each step. The customer downloads the app, enters a mobile number, verifies the OTP, provides basic details, chooses a PIN, and then either stops at minimum KYC or proceeds to full KYC by uploading documents and completing video verification. Each step must have a defined timeout, a retry limit and a help message, and the system must never create a usable wallet before the OTP verification succeeds. A common defect is allowing a wallet to be loaded before KYC is complete, or allowing a minimum KYC wallet to exceed its limit by splitting a large load into smaller loads. The BA should specify velocity checks that aggregate loads across a rolling 30 day window, not just a calendar month. From a documentation perspective, a BA should produce a KYC requirements pack that includes the customer journey map, the field level data dictionary, the document acceptance rules, the limit table for each KYC tier, the revalidation schedule, and the exception flows for rejected documents and failed video sessions. The pack should also define the audit trail. Every KYC decision must record who or what made it, when it was made, and what evidence was used. For example, if a customer PAN is verified through the official verification service, the system should store the verification reference, the response code and the timestamp. This level of detail is what separates a wallet project that passes a regulatory audit from one that fails it, and it is the BA who owns that detail.
Minimum KYC is the lighter tier, designed to let a customer start using a wallet quickly with only a mobile number verified through an OTP and basic details such as name and date of birth. The customer can load and spend money, but the limits are deliberately low. Historically the monthly load and spend limits for minimum KYC wallets were around 10,000 rupees, and the wallet cannot be used for fund transfers to another person or for cash withdrawal in most cases. The wallet must also be revalidated periodically, and if the customer does not complete full KYC within the permitted period, the issuer must restrict or close the wallet. A BA should document the exact limits as configurable values, not as hard coded numbers, because the regulator revises them from time to time.
Full KYC requires a stronger identity check, usually an official document such as a PAN card and an address proof, plus a video KYC session or an in person verification where the customer shows the original document and confirms their identity on camera. Once full KYC is complete, the wallet limits rise sharply. The customer can hold a larger balance, often up to 2,00,000 rupees in a full KYC PPI, can transfer money to other wallets and bank accounts, and can withdraw cash where the product supports it. The KYC record must be stored with the document type, the document number, the verification date, the verification method and the expiry date of the document. A BA must also specify what happens when a document expires, when a name mismatch is found, and when a customer fails video KYC twice.
The RBI PPI guidelines sit behind all of this, and a BA working on a wallet project should know the main rules rather than guessing them. The guidelines define who can issue a PPI, the capital requirements for the issuer, the need for a nodal or escrow account with a bank, the KYC tiers, the interoperability requirements, and the customer grievance and refund timelines. They also require the issuer to display fees clearly, to provide a transaction history, and to protect customer funds so that the money in the pooled account cannot be used for the issuer business expenses. A BA should maintain a compliance traceability matrix that maps every regulatory clause to a requirement, a design element and a test case, so that an audit can prove the system was built to the rule rather than to a developer interpretation.
Wallet onboarding is a sequence of steps that must be designed as a single smooth journey with clear failure handling at each step. The customer downloads the app, enters a mobile number, verifies the OTP, provides basic details, chooses a PIN, and then either stops at minimum KYC or proceeds to full KYC by uploading documents and completing video verification. Each step must have a defined timeout, a retry limit and a help message, and the system must never create a usable wallet before the OTP verification succeeds. A common defect is allowing a wallet to be loaded before KYC is complete, or allowing a minimum KYC wallet to exceed its limit by splitting a large load into smaller loads. The BA should specify velocity checks that aggregate loads across a rolling 30 day window, not just a calendar month.
From a documentation perspective, a BA should produce a KYC requirements pack that includes the customer journey map, the field level data dictionary, the document acceptance rules, the limit table for each KYC tier, the revalidation schedule, and the exception flows for rejected documents and failed video sessions. The pack should also define the audit trail. Every KYC decision must record who or what made it, when it was made, and what evidence was used. For example, if a customer PAN is verified through the official verification service, the system should store the verification reference, the response code and the timestamp. This level of detail is what separates a wallet project that passes a regulatory audit from one that fails it, and it is the BA who owns that detail.
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