RBI approves small, offline e-payments

What’s in the news?

The Reserve Bank of India (RBI) has come out with the framework for facilitating small-value digital payments in offline mode, a move that would promote digital payments in semi-urban and rural areas.
The framework incorporates feedback received from the pilot experiments on offline transactions conducted in different parts of the country between September 2020 and June 2021.

News in Detail

An offline digital payment 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 and mobile devices.
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.
There is a limit of ₹200 per transaction and an overall limit of ₹2,000 for all transactions until the balance in the account is replenished. Balance replenishment can only occur in an online mode.
Payment instruments shall be enabled for offline transactions based on explicit consent of the customer. The acquirer shall incur all liabilities arising out of technical or transaction security issues at the merchant’s end.
Customers also have recourse to the Reserve Bank — Integrated Ombudsman Scheme for grievance redress.

Significance

While India has witnessed a boom in sales of cheap smartphones and even cheaper data connections, internet connectivity is yet to reach many parts of the country. The latest available data from the World Bank showed that in 2019, only 41% of India’s population had access to an internet connection.
Therefore, RBI’s move to push offline payments is inclusive as many customers without smartphones would be able to reap the benefits of digitization. Offline transactions would give a push to digital transactions in areas with poor or weak Internet or telecom connectivity, particularly in semi-urban and rural areas. The framework has become applicable with immediate effect.

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