Coming soon, new framework for offline digital payments

In a move to broaden the reach and use of digital payments, the Reserve Bank of India has proposed to introduce a framework for carrying out retail digital payments in offline mode across the country.

This would enable customers to use digital payment modes even without internet connectivity.

The Statement on Developmental and Regulatory Policies on August 6, 2020, had announced a scheme to conduct pilot tests of innovative technology that enables retail digital payments even in situations where internet connectivity is low or not available (offline mode).

“Three pilots were successfully conducted under the Scheme in different parts of the country during the period from September 2020 to June 2021, involving small-value transactions covering a volume of 2.41 lakh for the value of ₹1.16 crore,” said RBI Governor Shaktikanta Das on Friday.

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At present, digital payment modes like the vastly popular Unified Payments Interface require internet connectivity and a smartphone, and are used largely in Tier 1, 2 and 3 cities and towns.


The government’s latest digital payments offering, e-RUPI, however, permits offline transactions, which can be carried out on feature phones and can be shared through an SMS or QR Code.

In recent months, a number of payment players have been working on offline payment solutions.

Offline chip-based card

Visa had, in August this year, announced that it is driving a Proof of Concept for offline digital payments along with Yes Bank and Axis Bank. Users can transact using chip-based Visa debit, credit and prepaid cards, even in places with low or no internet connectivity. The chip will hold a stored value of a daily spend limit of ₹2,000 and have a per transaction limit of ₹200, and would be akin to having a wallet with a preloaded amount.

‘Sound medium’

A number of players working on offline digital payments have also completed the test phase in the RBI’s first cohort under the Regulatory Sandbox with the theme of retail payments.

ToneTag is an offline, feature phone-based payment solution for peer-to-merchant transactions over ‘sound medium’ by establishing a secure channel for data transfer over interactive voice response (IVR) between devices and enables contactless payment even without internet.

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“This would enable even people who are not digitally savvy, those who may have a smartphone but not are comfortable linking their bank account to the phone, or even those without a smartphone, to be included in the financial inclusion spectrum. It can be adopted by different payment providers — banks, wallets and, new age payment players — to further scale their connections to a wider set of consumers,” said Kumar Abhishek, Founder and CEO, ToneTag.

Near-field communication

Similarly, PaySe is an offline digital cash product which proposes to help in digitisation of payments in rural areas, starting with self help groups (SHG), through an offline payment solution and a digitised SHG-centered ecosystem. It uses NFC (near-field communication) or Bluetooth low energy protocol for secure wireless offline payment mode.

Others like Ubona Technologies (BHIM Voice) and Eroute Technologies have also worked on offline payment solutions.