RBI Releases Guidelines For Facilitating Digital Payments in Offline Mode

The Reserve Bank of India published new guidelines for facilitating small value digital payments in offline mode on Monday. RBI has permitted offline digital payments up to Rs 200 per transaction, subject to a maximum of Rs 2,000, according to an official announcement released on January 3, 2022. A transaction that does not require internet access is referred to as offline digital payment.

RBI has said in its official statement that "An offline digital payment means a transaction which does not require internet or telecom connectivity. Under this new framework, such payments can be carried out face-to-face (proximity mode) using any channel or instrument like cards, wallets, mobile devices, etc. Such transactions would not require an Additional Factor of Authentication (AFA). Since the transactions are offline, alerts (by way of SMS and/or e-mail) will be received by the customer after a time lag. Transactions are subject to a limit of Rs. 200 per transaction and an overall limit of Rs. 2000 for all transactions until the balance in the account is replenished. Balance replenishment can only occur in an online mode."

The 'Framework for facilitating small value digital payments in offline mode,' according to RBI, contains input from pilot experiments on offline transactions undertaken in various regions of the nation between September 2020 and June 2021. RBI has said in its official statement that "With encouraging feedback from the pilots, it was announced in the Statement on Developmental and Regulatory policies dated October 08, 2021, that a framework for carrying out small value digital payments in offline mode across the country would be introduced."

RBI has also claimed that "Offline transactions are expected to give a push to digital transactions in areas with poor or weak internet or telecom connectivity, particularly in semi-urban and rural areas. The new framework is applicable with immediate effect." Only with the customer's explicit approval, the offline method of payment can be authorized.

As a result, the framework to allow small digital payments in offline mode via cards, wallets, mobile devices, and other means has been developed and for the same, the applicable guidelines should be followed by Authorised Payment System Operators (PSOs) and Payment System Participants (PSPs) - Acquirers and Issuers (banks and non-banks).

According to a detailed annexure issued on 3rd January 2021, RBI has said that offline payments may be made using any channel or instrument like cards, wallets, mobile devices, etc, and these payments shall be made in proximity (face to face) mode only and maybe also provided without Additional Factor of Authentication (AFA). The maximum amount for an offline payment transaction is Rs. 200 and the overall limit for offline transactions on a payment instrument is Rs. 2,000. According to RBI "The issuer shall send transaction alerts to users as soon as transaction details are received. There is no compulsion to send an alert for each transaction; however, details of each transaction shall be adequately conveyed. The acquirer shall incur all liabilities arising out of technical or transaction security issues at the merchant's end. The customers shall have recourse to the Reserve Bank - Integrated Ombudsman Scheme, as applicable, for grievance redressal."

RBI has also claimed on 03.01.2022 that "Payment instruments shall be enabled for offline transactions based on the explicit consent of the customer. Such transactions using cards shall be allowed without a requirement to switch on the contactless transaction channel, in relaxation of terms of DPSS circular no. DPSS.CO.PD no.1343/02.14.003/2019-20 dated January 15, 2020, on Enhancing Security of Card Transactions."