RBI Framework for Facilitating Small Value Digital Payments in Offline Mode

Key Highlight

RBI has issued this framework allowing offline payments up to Rs 200 per transaction, subject to an overall limit of Rs 2,000.

The Reserve Bank of India (RBI) vide Notification no. RBI/2021-22/146, CO.DPSS.POLC.No.S1264/02-14-003/2021-2022, dated 03.01.2022 has issued a framework for facilitating small-value digital payments in offline mode using cards, wallets, mobile devices, etc, to push digital transactions in rural and semi-urban areas.

The framework incorporates the feedback received from the pilot experiments on offline transactions conducted in different parts of the country during the period from September 2020 to June 2021.

Applicability

The Framework is applicable with immediate effect.

An offline payment means a transaction which does not require internet or telecom connectivity to take effect. Authorized 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 following requirements:

1. Offline payments may be made using any channel or instrument like cards, wallets, mobile devices, etc.
2. Offline payments shall be made in proximity (face to face) mode only.
3. Offline payment transactions may be offered without Additional Factor of Authentication (AFA).
4. Payment instruments shall be enabled for offline transactions based on 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.
5. The upper limit of an offline payment transaction shall be Rs. 200. The total limit for offline transactions on a payment instrument shall be Rs. 2,000 at any point in time. Replenishment of used limit shall be allowed only in online mode with AFA.
6. The issuer shall send transaction alerts to users as soon as transaction details are received. There is no compulsion to send alert for each transaction; however, details of each transaction shall be adequately conveyed.
7. The acquirer shall incur all liabilities arising out of technical or transaction security issues at merchant's end.
8. Offline payments shall be covered under the provisions of RBI's limited customer liability circulars (as amended from time to time) - DBR.No.Leg.BC.78/09.07.005/2017-18 dated July 06, 2017; DCBR.BPD.(PCB/RCB).Cir.No.06/12.05.001/2017-18 dated December 14, 2017 and para 17 of Master Direction on Prepaid Payment Instruments dated August 27, 2021.
9. The customers shall have recourse to the Reserve Bank – Integrated Ombudsman Scheme, as applicable, for grievance redressal.
10. 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

The framework will enable the Authorised Payment System Operators (PSOs) and Payment System Participants (PSPs), Acquirers and Issuers (banks and non-banks) to conduct small value offline digital payments. The RBI has asked all the authorized payment system operators (PSOs) and payment system participants (PSPs) acquirers and issuers (banks and non-banks) to ensure compliance with the instructions.

Disclaimer:  Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.

Also Read: RBI issues regulations under the amended Factoring Regulation Act, 2011