Offline digital payments network to work through wallet-type mechanism

The guidelines, released on Monday, say there is no need for AFA while making the transaction, but there will be an AFA while loading the payment instrument with an amount of up to Rs 2,000.

While the Rs 200 cap on transactions is aimed at reducing risk, some players are of the view that it is too low.
While the Rs 200 cap on transactions is aimed at reducing risk, some players are of the view that it is too low.

Offline digital payments under the Reserve Bank of India’s (RBI) new framework will work through a wallet or prepaid payment instrument (PPI)-like mechanism, industry players said. While the Rs 200 cap on transactions is aimed at reducing risk, some players are of the view that it is too low.

Naveen Surya, chairman emeritus, Payments Council of India, said the framework envisages the use of near-field payments technology across a wider set of situations. “The framework for offline digital payments envisages extending the technology used in toll payments and tap-and-go to a larger number of use cases.

It’s a good initiative and the Rs 200 cap is clearly meant to reduce risk as there is no AFA (additional factor of authentication) involved in the transaction.”

The guidelines, released on Monday, say there is no need for AFA while making the transaction, but there will be an AFA while loading the payment instrument with an amount of up to Rs 2,000.

According to industry sources, some of the entities who participated in the regulator’s cohort on retail payments are ready to go to market. Four entities had participated in the cohort. Tap Smart Data Information Services tested a set of near-field communication (NFC)-based prepaid cards and NFC-enabled point of sale (PoS) devices to facilitate offline person-to-merchant (P2M) transactions. ToneTag tested an offline, feature phone-based Unified Payments Interface (UPI) payment solution for P2M transactions over ‘sound medium’ by establishing a secure channel for data transfer over interactive voice response (IVR) between devices.

Ubona Technologies tested a voice-based UPI payment solution that facilitates offline person-to person (P2P) and P2M transactions using mobile phones, including feature phones. Eroute Technologies tested a UPI-based offline payment solution using SIM overlay smartcards placed on the SIM to drive SIM tool kit (STK) menu-based user interface to facilitate P2P/P2M transactions.

The framework will help take offline payments beyond closed-loop networks, said Anand Kumar Bajaj, founder, MD and CEO, PayNearby. “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 smartphones through cards, tokens or even via voice-enabled solutions,” Bajaj said.

Starting small, the framework will help push cashless transactions in regions with poor internet and telecom connectivity, industry executives said. Mandar Agashe, founder, managing director & vice chairman, Sarvatra Technologies, said: “Offline payments will offer a huge boost to the digital payment industry and will empower users in remote regions with fluctuating networks to avail digital transactions seamlessly. While the transaction limit of Rs 200 might be small, it’s a big move towards encouraging high volumes of digital transactions across various modes.”

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