RBI to allow offline payments using cards, mobile devices – Here is how it works

RBI has proposed to allow a pilot scheme for small value payments in off-line mode with built-in features for safeguarding interest of users, liability protection.

Credit cards, debit cards, payments online, offline, mobile devices
The scheme of offline retail payments using credit cards, debit cards and mobile devices may soon be available.

Many times while trying to make payments using a credit or debit card, one finds that the payment has failed. This could be due to any reason, one of which is lack of internet connectivity. Unable to establish connection with the payments platform could also be a reason. However, soon, you could be making offline payments using cards and mobile devices.

The RBI has proposed to allow a pilot scheme for small value payments in offline mode with built-in features for safeguarding the interest of users, liability protection, etc. Under the pilot scheme, authorised Payment System Operators (PSOs) – banks and non-banks – will be able to provide offline payment solutions using cards, wallets or mobile devices for remote or proximity payments.

The pilot scheme will be available till March 31, 2021 only.

It has been observed by RBI that even though there has been considerable growth in digital payments using mobile phones, cards, wallets, etc., the lack of internet connectivity or low speed of internet, especially in remote areas, is a major impediment in the adoption of digital payments.

How it works

In the offline mode using cards, the card data and details of the transaction are stored at the terminal which also generates a transaction response including data you can use to generate a receipt. Later, when the internet connection is established, it sends the stored payment data to the payments platform for further processing.

Against this backdrop, providing an option of off-line payments through cards, wallets and mobile devices is expected to further the adoption of digital payments. The Reserve Bank of India is encouraging entities to develop offline payment solutions.

The payment solutions provided to users shall be subject to the following terms and conditions:

a) Payments could be made using cards, wallets or mobile devices or through any other channel.
b) Payments may be made in remote or proximity mode.
c) Payment transactions can be offered without any Additional Factor of Authentication (AFA).
d) The upper limit of a payment transaction shall be Rs.200.
e) The total limit for offline transactions on an instrument shall be Rs. 2,000, at any point of time. Resetting of the limit shall be allowed in online mode with AFA.
f) The PSO shall send real time transaction alerts to users as soon as transaction details are received.
g) Contactless payments shall adhere to EMV standards.
h) Payment transactions in offline mode without AFA shall be at the choice of the user.
i) The acquirer shall incur all liabilities arising out of technical or security issues at merchant’s end.

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