Small Value Digital Payments upto Rs. 2,000 allowed by RBI in Offline Mode (without Internet/ OTP)

Small Value Digital Payments upto Rs. 2,000 allowed by RBI in Offline Mode (without Internet/ OTP), under the new framework applicable w.e.f. 03/01/2022, to give a boost to digital transactions in areas with poor or weak internet or telecom connectivity, particularly in semi-urban and rural areas, based on experiments conducted during September 2020 to June 2021.

In the offline mode, the digital payments are effected face-to-face using any channel/ instrument like cards, wallets, mobile devices, etc. without requiring any further authentication/ one time password (OTP). In view of the fact that the transactions are being effected offline, the sms/ email alerts will not be received by the customer instantly, i.e. there will be a time lag when the customer will get to know about the transaction.

Digital payments in offline mode will be subject to a cap limit of Rs. 200 per transaction and an overall limit of Rs. 2,000 for all transactions, until the balance in the account is restored/ replenished by the customer. Offline mode of digital payments shall be enabled only after obtaining specific consent of the customer, who shall enjoy protection of limited liability as per RBI Circular and shall also have recourse to the RBI Integrated Ombudsman Scheme for grievance redress.

RBI Press Release dt. 03/01/2022: RBI releases Framework for Facilitating Small Value Digital Payments in Offline Mode

The Reserve Bank has today placed on its website the ‘Framework for facilitating small value digital payments in offline mode’. 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.

An offline digital payment means a transaction which 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, mobile devices, etc. 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. Transactions are subject to a limit of Rs. 200 per transaction and an overall limit of Rs. 2,000 for all transactions until balance in the account is replenished. Balance replenishment can only occur in an on-line mode.

Offline mode of payment can be enabled only after obtaining specific consent of the customer. Customers shall enjoy protection under the provisions of circulars limiting customer liability issued by Reserve Bank (as amended from time to time). Customers also have recourse to the Reserve Bank – Integrated Ombudsman Scheme for grievance redress.

Offline transactions are expected to give a push to digital transactions in areas with poor or weak internet or telecom connectivity, particularly in semi-urban and rural areas. The new framework is applicable with immediate effect.

RBI Notification 2021-22/146 dt.  03/01/2022: Framework for Facilitating Small Value Digital Payments in Offline Mode

1. Reserve Bank had, vide circular dt. 06/08/2020, permitted a pilot scheme to encourage technological innovations that enable small value digital transactions in offline mode. It was stated therein that the decision on formalising such a system would be based on the experience gained.

2. Pilot testing was undertaken by some entities during the period from September 2020 to July 2021. With encouraging feedback from the pilots, it was announced in the Statement on Developmental and Regulatory policies dt, 08/10/2021, that a framework for carrying out small value digital payments in offline mode across the country would be introduced.

3. Accordingly, the framework to enable small value digital payments in offline mode using cards, wallets, mobile devices, etc., is detailed in Annex. Authorised Payment System Operators (PSOs) and Payment System Participants (PSPs)- Acquirers and Issuers (banks and non-banks) – shall ensure compliance with all the applicable instructions.

4. This directive is issued under Section 10 (2) read with Section 18 of Payment and Settlement Systems Act, 2007 (Act 51 of 2007) and shall come into effect immediately.

Annex

CO.DPSS. POLC.No. S1264/ 02-14-003/ 2021-2022 dt. 03/01/2022

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

i) Offline payments may be made using any channel or instrument like cards, wallets, mobile devices, etc.

ii) Offline payments shall be made in proximity (face to face) mode only.

iii) Offline payment transactions may be offered without Additional Factor of Authentication (AFA).

iv) 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 dt. 15/01/2020 on Enhancing Security of Card Transactions.

v) The upper limit of an offline payment transaction shall be ₹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.

vi) 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.

vii) The acquirer shall incur all liabilities arising out of technical or transaction security issues at merchant’s end.

viii) 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 dt. 06/07/2017; DCBR. BPD. (PCB/RCB). Cir.No.06/ 12.05.001/ 2017-18 dt. 14/12/2017 and para 17 of Master Direction on Prepaid Payment Instruments dt. 27/08/2021.

ix) The customers shall have recourse to the Reserve Bank – Integrated Ombudsman Scheme, as applicable, for grievance redressal.

x) 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.

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