Innovation in India’s digital payment mechanism has been at its peak in the last few years. The fact that tech startups, government bodies, and regulators, have all been on the same page, has made the digital payments experience smooth.
While digital payments have now reached India’s smallest of towns and cities, unreliable internet connection is still a major deterrent for people to adopt online payments.
Taking notice of this fact, last year in September, the Reserve Bank of India (RBI) had launched pilot programs that let people send and receive money digitally without any internet connection.
Between September 2020 and June this year, RBI ran three pilots in different parts of the country to see if digital payments would work seamlessly if there were no internet connection. It also wanted to see if there would be many takers of this innovative technology.
In a bi-monthly review meeting of the Monetary Policy Committee held on Friday, RBI said people made small-value transactions worth Rs 1.16 crore during the course of the pilot. In total, there were 2.41 lakh transactions made using cards and digital wallets. The upper limit for each digital transaction was capped at Rs 200.
“The learnings indicate that there is a scope to introduce such solutions, especially in remote areas. Given the experience gained from the pilots and the encouraging feedback, it is proposed to introduce a framework for carrying out retail digital payments in offline mode across the country,” RBI said in a statement on Friday.
It is quite evident that RBI is pumped up with the outcome of the three pilots. And now, it’s going to introduce a framework for such offline digital payments across the country. RBI will soon issue detailed guidelines on how it will be implemented.
“This will further expand the reach of digital payments and open up new opportunities for individuals and businesses,” said Shaktikanta Das, Governor of RBI.
RBI increases IMPS limit to Rs 5 lakh
In its meeting, RBI dropped one more piece of good news that’s set to benefit the digital payment ecosystem exponentially.
RBI has decided to take digital transactions a notch higher than what it is right now. To that effect, the apex bank has increased the limit of IMPS transactions from the current Rs 2 lakh to Rs 5 lakh per transaction.
This is largely going to benefit merchants as till now they have had to split payments into different transactions since IMPS is capped at Rs 2 lakh.
Benefits of using IMPS
Immediate Payment Service or IMPS was launched by the National Payment Council of India in 2010. Currently, it’s one of the most used payment methods in India. Let’s quickly look at a few benefits of using IMPS:
- Instant fund transfer: In comparison with RTGS (Real-Time Gross Settlements) and NEFT (National Electronic Funds Transfer) payment rails, which are bound by banking hours, IMPS provides a much quicker settlement for merchants. The money gets transferred immediately.
- Available 365 days: IMPS doesn’t take any holidays and works on all weekends and bank holidays. This got to be the best feature of IMPS, as it takes away the legacy problem of India’s payment system where merchants had to wait for the weekend to get over to accept or pay money.
- Simple process: The simplicity with which IMPS transactions happen makes it one of the most versatile payments rail in the country. Apart from working on smartphones, merchants can also use IMPS via SMS or using an ATM. Such wide usability certainly increases its reach.
The recently proposed changes in the upper limit of every IMPS transaction will highly benefit merchants who have had to suffer because of this limit.
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