RBI Notification: Offline Retail Payments using Cards/Mobile Devices

Ashish M. Shaji

13 Sep, 2022

The Reserve Bank of India has proposed a scheme for making small-value payments in offline mode using debit cards, credit cards, and mobile devices. Under this pilot scheme, RBI Notification has authorized Payment System Operators (banks and non-banks) would be able to provide offline payment solutions.

What was the need for RBI notification on offline retail payments?

You could have experienced cases of failed payments while using a credit or a debit card for transactions. This could be due to erratic internet connectivity. Another reason could be the inability of the establishment of the connection with the payments platform.

The RBI notification on offline retail payments can solve this impediment. Moreover, the availability of options to make offline payments can boost the adoption of digital payments. It is also expected to encourage technological innovations that enable offline digital transactions.

What shall be the period until which the pilot scheme has been made available?

The pilot scheme shall be undertaken until 31^st March 2021 only. The RBI shall decide on formalizing such a system based on the experience gained under the pilot.

How does it work?

In case of using credit or debit cards in the offline mode, the card data and details of the transactions are stored at the terminal, which generates a transaction response including data you can use to generate a receipt. Once the internet connection is established, it sends the stored payments data to the payments platform for further processing.

Against this backdrop, providing an option of offline payments is expected to facilitate the adoption of digital payments also.

What are the terms and conditions laid down as per RBI notification on offline retail payments?

Under the pilot scheme, the Payment System Operators (banks and non-banks) can offer digital payments offline. It means payments that do not require internet connectivity to take effect.

The payments solutions provided to users will be provided subject to the following conditions:

• Payments can be made using cards, wallets, mobile devices, or through any other channel.
• Payments can be made in remote or proximity mode.
• Payment transactions can be provided without any Additional Factor of Authentication.
• The upper limit of a payment transaction will be 200 rupees.
• The total limit for the offline transactions on an instrument will be 2000 rupees at any time. The resetting of the limit shall be permitted in online mode with Additional Factor of Authentication.
• The Payments System Operators shall send real-time transaction alerts to users as soon as transaction details are received.
• Contactless payments shall adhere to the EMV standards as hitherto.
• Payments transactions in offline mode without Additional Factor of Authentication willl be at the choice of an user.
• The acquirer will incur all liabilities arising out of the technical or security issues at merchants’ end.
• These payments will be covered by the provisions of the limited customer liability Circular DBR. No. Leg. BC. 78/ 09.07.005/2017-18 dated 6^th July 2017 and DPSS. CO.PD No. 1417/02.14.006/2018-19 dated 4^th Jan 2019. 
• Before the introduction of the operations under the scheme, Payments System Operators are required to inform the Reserve Bank of the detailed specifications of the payment solutions they would offer. However, they may launch operations without waiting for any approval from the Reserve Bank.
• Entities other than Payments System Operators having innovative solutions can tie up with Payments System Operators to offer their products.
• The Reserve Bank reserves the right to advise a Payments System Operator to stop transactions and exit the pilot scheme in the event of non-compliance with these conditions.

Conclusion

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