RBI Releases Offline Digital Payment Framework for Small Value Transactions

RBI-Framework

The Reserve Bank of India (RBI) has recently released a framework for small value transactions in the offline mode on January 3, 2022. As detailed in the framework, offline payments of up to Rs. 200 per transaction are allowed, subject to the total offline transaction limit of Rs. 2,000 on a specific payment instrument. These offline payments can be made using different instruments, like cards, digital wallets, or mobile devices in face-to-face mode (proximity) to the recipient. Although the framework is not region-specific, it will largely encourage individuals/merchants in rural and semi-urban areas to start accepting payments digitally.

What are offline digital payments?

Offline digital payments refer to the payment transactions that can be made or processed without Internet connectivity. They are also payment-instrument-agnostic, which means people can choose their preferred payment instruments for such transactions.

You should also know the following details related to the RBI’s framework:

  • The offline digital payment framework is based on the feedback of a pilot scheme that was permitted to enable small value digital transactions.
  • The authorised Payment System Participants (PSPs), Payment System Operators (PSOs), acquirers, and issuers are asked to ensure compliance with the framework and the related instructions.
  • It is also issued under Section 10 (2) read with Sec. 18 of Payment and Settlement Systems Act, 2007.
  • The alerts or notifications for their offline transactions may reach the customer after a time lag.
  • Offline digital payments may not require AFA or Additional Factor of Authentication.
  • The payment instruments are to be enabled based on the customer’s consent for offline digital payment transactions.
  • The replenishment of used transaction limit will be allowed on online mode with AFA only.
  • The acquirer will incur the liability related to technical or transaction security issues on the merchant side.
  • Customers are also protected under the provisions of limited customer liability circulars from RBI.

The way forward

The RBI’s framework will work as the much-needed push to offline digital payments across the country, especially the regions that are not yet empowered with high-speed Internet. Since this framework is applicable with immediate effect, we can expect further penetration of digital payments in the country and an expected shift away from cash.

 

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