January 5, 2022 - 11:41 am

RBI Allows Offline Digital Payments 

    Giving a big push to digital transaction in areas with poor internet connectivity the Reserve Bank of India (RBI) has allowed offline mode of payments using any channel or instrument like cards, wallets or mobile devices. The new framework is applicable with immediate effect.

    As per the rules the upper limit of an offline payment transaction will be ₹200. The total limit for offline transaction on a payment instrument will be ₹2000 at any point in time. The regulator also stated that payment instruments will be enabled for offline transactions based on explicit consent of the customer. An offline digital payment means a transaction that does not require internet or telecom connectivity. Under the offline mode, payments can be carried out face-to-face (proximity mode) using any channel or instrument like cards, wallets, and mobile devices. The RBI also said that the acquirer will incur all liabilities arising out of technical or transaction security issues at merchant's end.

    Since the transactions are offline these transactions will not require an additional factor of authentication (AFA), adding that alerts ( by way of a service and/or e-mail ) will be received by the customer after a time lag. Transactions are subject to a limit of ₹200 per transaction and an overall limits of ₹2,000 for all transactions until the balance in the account is replenished. Balance replenishment can only occur in an offline mode. The feedback received from the pilot experiments an offline transactions conducted in different parts of the country during the period from September 2020 to Jun 2021.

    A great move by RBI, as it will empower regional rural markets, where internet connectivity is still erratic, to leapfrog into the digital payments race. Currently, many transactions are being conducted that do not require mobile connectivity to operate. However, they are closed-loop mechanisms and are restricted to a particular network. This move will enable both merchants and end-consumers across the ecosystem to conduct digital transactions seamlessly, even in the absence of internet connectivity and smart phones through cards, tokens or even via voice-enable solutions. The Offline transactions will definitely bring a majority of the customers without smart phones into the digitisation fold. It will encourage higher volumes of digital transactions across hinterlands in the country, which will eventually bridge the digital divide between urban and rural markets.