The Reserve Bank of India on Thursday raised the transaction limit for digital small amounts in offline mode from ₹200 to ₹500, effective August 24. The move comes just days after Apex Bank made a proposal to boost transaction value at its bimonthly Monetary Policy Committee meeting.
“By eliminating the need for two-factor authentication for small value transactions, these channels enable faster, reliable and contactless payment methods for everyday small value payments, transit payments, etc. Since then, there have been calls for these limits to be raised.” “To encourage broader acceptance of this payment type and to include more use cases in this payment type, it is now proposed to increase the limit per transaction to ₹500,” the RBI had said in its bi-monthly meeting.
In January last year, Apex Bank released the “Framework to Facilitate Small Amount Digital Payments in Offline Mode”, which enables offline payments of up to ₹200. At the time, Apex Bank had declared that the total limit for offline transactions with a payment instrument should be ₹2,000 at any time. The decision was made to encourage digital transactions across the country, especially in rural and semi-urban areas.
According to the RBI framework, an offline payment means a transaction that does not require an internet or telecommunications connection. Offline payment of digital small amounts can be done with either the National Common Mobility Card or UPI Lite.
According to RBI guidelines, offline payments can be made through any channel or instrument such as cards, wallets, mobile devices, etc. and must only be made in proximity (face-to-face) mode. The offline payment transactions could be offered without the additional factor of authentication, RBI previously said. In addition, in August 2020, Apex Bank launched a pilot for low-value payments in offline mode.
“Over the years, the Reserve Bank has prioritized security measures for digital payments, such as requiring an additional factor of authentication and online notifications for each transaction. These actions have significantly increased customer trust and security, leading to increased adoption of digital payments. The lack of “Insufficient or intermittent internet connectivity, especially in remote areas, represents a major barrier to digital payment adoption. The availability of options for offline payments using cards, wallets or mobile devices could encourage digital payment adoption,” according to the statement RBI.
Notably, to improve digital payments, Apex Bank has also proposed facilitating offline transactions using Near Field Communication (NFC) technology.
This feature will not only enable retail digital payments in situations where the internet or telecom connection is “weak or unavailable,” but also ensure speed with minimal transaction drops, the central bank says, adding that it will issue instructions to that effect NPCI (National Payment Corporation of India) will be announced in this regard shortly.
