Small Value Digital Payments in Offline Mode

Small Value Digital Payments in Offline Mode

Subject – Economy

Context – RBI unveils framework to enable small value digital payments in offline mode

Concept –

• The Reserve Bank of India (RBI) issued a framework to enable small value digital payments in offline mode using any channel or instrument such as cards, wallets and mobile devices.
• An offline digital payment means a transaction which does not require internet or telecom connectivity.
• Under this new framework, which is applicable with immediate effect, offline payments can be made in face-to-face (proximity) mode only.
• Payment instruments will be enabled for offline transactions by Authorised Payment System Operators and Participants (Banks and Non-banks) based on explicit consent of the customer.
• Offline transactions using cards will be allowed without a requirement to switch on the contactless transaction channel.
• Such transactions will not require an Additional Factor of Authentication (AFA). Since the transactions are offline, alerts (SMS and / or email) will be received by the customer after a time lag.
• The upper limit of an offline payment transaction will be ₹200. The total limit for offline transactions on a payment instrument will be ₹2,000 at any point in time.
• Replenishment of used limit will be allowed only in online mode with AFA.
• Customers will enjoy protection under the provisions of circulars limiting customer liability issued by RBI (as amended from time to time).
• Further, they also have recourse to the Reserve Bank – Integrated Ombudsman Scheme for grievance redress.
• The acquirer will incur all liabilities arising out of technical or transaction security issues at merchant’s end.

Additional Factor of Authentication (AFA)

• Two-step multi-factor authentication or additional factor authentication (AFA) increases the security of a digital account by using two different pieces of information.
• For most online transactions, a One-Time Password (OTP) is generated and sent to your registered cell phone number, which you must enter to complete the transaction.