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RBI releases framework for offline digital payments, capping each transaction at Rs 200

But ground rules set up by the RBI reveal that not everyone will be allowed to provide the offline service.

payments, digital payments

“Offline payments shall be made in proximity (face to face) mode only,” read the framework released by the Reserve Bank of India for facilitating digital payments in an offline mode. The guidelines also stipulate that such transactions do not require additional factor authentication (AFA).

The central bank has capped the ceiling of a single transaction at Rs. 200 whereas the total limit for offline transactions on a payment instrument will be Rs. 2,000 at any point in time.

The RBI has defined an offline payment as a transaction which does not require internet or telecom connectivity to take effect. The release added that the guidelines will come into effect immediately.

Why it matters: The option of offline digital payments may result in an uptake of digital payments in rural and semi-urban areas where internet connectivity continues to remain patchy and millions continue to be deprived of internet access.

Key takeaways from the RBI’s framework

The central bank said that only authorised Payment System Operators (PSOs) and Payment System Participants (PSPs) are permitted to provide offline payment services. Here are some of the additional measures they will need to comply with:

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  • Authorised entities may offer offline payments using any channel or instrument like cards, wallets, mobile devices, etc.
  • Payment instruments shall be enabled for offline transactions based on explicit consent of the customer.
  • Renewing the used limit for offline payments shall be allowed only in online mode with AFA.
  • The issuer will have to send transaction alerts to users as soon as transaction details are received. The RBI added that there is no compulsion to send an alert for each transaction; however, details of each transaction must be adequately conveyed to the customer.
  • All liabilities arising out of technical or transaction security issues at merchant’s end shall be incurred by the acquirer.
  • Customers shall have recourse to the Reserve Bank– Integrated Ombudsman Scheme, for grievance redressal.

Summary of RBI’s efforts towards introducing offline payments

The central bank first announced its plans to offer offline payments in August, 2020 when it released a circular permitting a pilot scheme to “encourage technological innovations that enable small value digital transactions in offline mode”.

The bank had said that it would make a decision on formalising such a system based on the experience gained from the pilot scheme. The press release revealed that a few entities participated in the pilot testing which was undertaken from September 2020 to July 2021.

The bank said that it had received encouraging feedback from the pilot scheme and then set out to unveil a framework across the country in October 2021.

The latest framework has been issued under Section 10 (2) and Section 18 of the Payment and Settlement Systems Act, 2007.

Value of UPI transactions grows by 1.9x in December 2021

The transaction value on the Unified Payments Interface (UPI) stood at Rs 8.27 lakh crores in December 2021, up by 1.9x compared to the same month in the previous year, according to data released by the National Payments Corporation of India (NPCI). Overall, transaction volumes increased by two times over the last year to 4.56 billion in December. While UPI payment volumes grew by 8.9% in December 2021 over the previous month, the UPI transaction value went up by 7.6% compared to November 2021.

This steady increase comes after a drastic slump in both metrics in April last year, given several state-imposed lockdowns due to the second wave of the COVID-19 pandemic.

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Written By

I cover several beats such as Crypto, Telecom, and OTT at MediaNama. I can be found loitering at my local theatre when I am off work consuming movies by the dozen.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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