The Reserve Bank of India (RBI) has fixed the ceiling for digital payments in offline mode at Rs 200 per transaction, subject to an overall limit of Rs 2,000.

Such payments can only be carried out face-to-face using any channel or instrument like cards, wallets, mobile devices, etc.

Issuing the ‘Framework for facilitating small value digital payments in offline mode’, the RBI on Monday said these transactions would not require an additional factor of authentication (AFA). As the transactions are offline, alerts (by way of SMS and/or e-mail) will be received by the customer after a time lag.

“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," the RBI said.

Balance replenishment can only occur in an online mode. Consent of the customer is needed to enable offline mode of payment. Customers shall enjoy protection under the provisions of circulars limiting customer liability issued by the RBI (as amended from time to time).

Customers can also seek grievance redress from the RBI–integrated ombudsman scheme. Offline transactions are meant to help digital transactions in areas with poor or weak internet or telecom connectivity, particularly in semi-urban and rural areas. Although India has seen a boom in sales of cheap smartphones and even cheaper data connections, internet connectivity is yet to reach many pockets of the country.

The new framework, which comes into force with immediate effect, follows the feedback received from the pilot experiments on offline transactions conducted in different parts of the country from September 2020 to June 2021.

On 6 August, the RBI had allowed a pilot scheme to encourage technological innovations that enable small value digital transactions done offline.

An offline digital payment is a transaction which does not require internet or telecom connectivity. The regulator said that authorised Payment System Operators (PSOs) and Payment System Participants (PSPs) looking to facilitate small value offline digital payments have to comply with the new guidelines.