written by | January 4, 2022

RBI releases framework for offline digital payments, allows ₹200/transaction

The Reserve Bank of India has announced a framework for digital payments of small amounts in offline mode or without using the internet. Under the offline transaction system, transactions can be made face-to-face or in proximity mode using channels or methods like cards, wallets, and mobile devices. However, the maximum limit for such an offline payment is capped at ₹200 per transaction and the total limit shall not exceed ₹2000 at any point in time until the balance in the account is refilled. The refilling or replenishment can be made in the online mode only.

According to a release by the RBI, an offline digital payment means a transaction that does not need internet or telecom (telecommunication) connectivity. These offline transactions in offline mode will not require an Additional Factor of Authentication or AFA. After the transaction, the customer will receive the transaction alert after some delay via SMS or email, as the payment has been done offline.

The offline transaction mode can be authorized after the customer has provided their consent regarding the same. The move by RBI is expected to enable easy access to digital transactions in areas with poor or weak internet or telecom connectivity, more specifically in semi-urban and rural areas. 

What is the Framework announced by the RBI?

In the circular by RBI which was released on Monday, 3rd Jan 2022, the guidelines for offline transactions in digital mode have been specified under the Framework for Facilitating Small Value Digital Payments in Offline Mode.

In October 2021, RBI had hinted that it would put forward a framework for digital payments of small value in offline mode all over the country. The decision of enabling such payments would be taken after analyzing the outcome from pilot tests that encourage technological innovations. The pilot projects were undertaken in 2020 and 2021 by several bodies and resulted in a positive response.

Consequently, the new framework was announced vide the directive issued by RBI under Section 10 (2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007). The framework is applicable with immediate effect.

Following are the main points of the framework for the offline digital payment -

  • Offline payment is defined as a transaction that does not require internet or telecom connectivity to take effect.
  • These offline payments can be made in face-to-face or proximity mode only.
  • Any channel or instrument such as debit or credit cards, mobile phones, or wallets can be used to carry out offline digital transactions.
  • Additional Factor of Authentication (AFA) will not be required to carry out the transactions.
  • The Central Bank has asked all the authorized payment system operators (PSOs) and payment system participants (PSPs) acquirers and issuers (banks and non-banks) to ensure compliance with the instructions.
  • Only by the clear and direct consent of the customer can the transactions be enabled through the payment channels.
  • The transactions using cards will be permitted without the need to switch on the contactless transaction channel. For this purpose, the RBI has relaxed its terms directed under a previous circular.
  • The upper limit of each transaction is set to ₹200. The overall limit for offline transactions shall be ₹2,000 on a payment instrument at any point in time. The refilling or replenishment can be made in the online mode only with AFA.
  • Transaction alerts will be sent to the user whenever the details of the transaction are received. Alerts may not be given out for all transactions.
  • The acquirer shall incur all liabilities arising out of technical or transaction security issues at the merchant’s end.
  • Customers can take recourse to the Reserve Bank – Integrated Ombudsman Scheme, as applicable, for grievance redressal.

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