RBI releases framework for facilitating small value digital payments in offline mode

The RBI framework for small digital payments in offline mode was released on January 3rd 20221.. Reserve Bank had, vide circular dated August 6th 2020, initiated a pilot scheme to promote technological innovations that facilitate small value digital transactions in offline mode. Pilot testing was carried out by some entities during the period from September 2020 to July 2021.

With positive feedback from the pilots, it was announced that a framework for carrying out small value digital payments in offline mode across the country would be introduced. Accordingly, the guidelines to enable small value digital payments in offline mode using cards, wallets, mobile devices, etc., is detailed below. Authorised Payment System Operators (PSOs) and Payment System Participants (PSPs) – Acquirers and Issuers (banks and non-banks) – shall make sure that their activities should in compliance with all the applicable instructions.

The RBI framework for small digital payments

An offline payment means a transaction has been made without internet or telecom connectivity to take effect. Authorised Payment System Operators (PSOs) and Payment System Participants (PSPs) – Acquirers and Issuers (banks and non-banks) – desirous to provide/enable payment solutions that facilitate small value digital payments in offline mode shall comply with the below-mentioned requirements:

• Offline payments may be made using any channel or instrument like cards, wallets, mobile devices, etc.

Offline payments shall be made in proximity (face to face) mode only.

• Offline payment transactions should be made without an Additional Factor of Authentication (AFA).

• Payment instruments shall be activated for offline transactions based on clear approval from the customer. Those transactions using cards shall be permitted without a requirement to switch on the contactless transaction channel, in relaxation of terms of Enhancing Security of Card Transactions.

• The maximum limit of an offline payment transaction shall be INR 200. The total limit for offline transactions on a payment instrument shall be INR 2,000 at any point in time. Replenishment of the used limit shall be allowed only in online mode with AFA.

• The issuer shall send transaction alerts to users as soon as transaction details are received. There is no mandatory clause to send an alert for every transaction; however, details of each transaction shall be adequately informed.

• The acquirer shall be responsible for all the liabilities arising out of technical or transaction security problems at the merchant’s end.

• Offline payments shall be protected under the provisions of RBI’s limited customer liability circulars (as amended from time to time).

• The customers may seek any remedy from the Reserve Bank – Integrated Ombudsman Scheme, as applicable, for their grievance redressal.

• Reserve Bank retains the right to stop or modify the operations of any such payment solution that enables small value digital payments in offline mode.

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