Prepaid Cards in India: Types, Uses, Limits & How They Differ From Credit Cards

Last reviewed: October 2026

A prepaid card works like a gift card you fill up in advance: you load money onto it, then spend only what's loaded. In India, prepaid cards and mobile wallets are called prepaid payment instruments (PPIs) and are regulated by the RBI. Here are the main types of prepaid cards, their limits and how they compare with credit cards.

How a prepaid card works

1. You (or your employer, or someone gifting you) load money onto the card or wallet.
2. You spend online, in shops or through UPI, depending on the card.
3. When the balance runs out, you reload it, unless it's a one-time card like a gift card.

There's no credit, so no bill, no interest and no effect on your credit score.

Types of prepaid cards in India

Closed-loop cards (like a single store's gift card) work only with that company. Semi-closed wallets work at many merchants. Bank-issued open-loop prepaid cards on Visa, Mastercard or RuPay work wherever those cards are accepted.

RBI limits on prepaid cards

Under the RBI's rules for prepaid payment instruments:

• Small PPIs (minimum KYC, like an OTP-verified mobile number): balance up to ₹10,000 at any time, used only for buying goods and services.
• Full-KYC PPIs: balance up to ₹2 lakh, with more features such as fund transfers.
• Gift PPIs: up to ₹10,000 each.

The RBI released a draft of updated PPI rules in April 2026, so some limits and features may change. Check your issuer's current terms.

Pros of prepaid cards

• Budget control: you can't spend more than you load.
• No credit check and no debt.
• Good for gifting and for giving teenagers a controlled way to pay.
• Forex cards can lock in an exchange rate before you travel.
• Lower risk: if a prepaid card is misused, your bank account and credit line aren't exposed.

Cons of prepaid cards

• No credit history: using a prepaid card doesn't build your credit score.
• Fees: some cards charge for issuance, reloading, inactivity or cash withdrawal.
• Expiry: gift cards and some prepaid cards have a validity period.
• Fewer rewards than most credit cards.
• Limits on how much you can load and hold.

Prepaid card vs credit card vs debit card

If you want to build a credit score but can't get a regular card, a secured credit card against an FD is a better choice than a prepaid card. For safer online shopping, also consider a virtual credit card.

The bottom line

Prepaid cards are great for budgets, gifts and travel money, but they don't build credit. If you want rewards and a credit history, a credit card used carefully is the better long-term tool.

Want to compare credit cards? Compare credit cards on PaisaSimple →

Sources

• RBI Master Direction – Prepaid Payment Instruments

Disclaimer: This article is for general information only and is not financial advice. PPI limits and fees are set by the RBI and each issuer and can change; the RBI released draft updated rules in April 2026.