National Payments Corp. is all set to test the solution to Internet Free Digital Payment. Mint reported the news firstly on Sunday January 23. The solution will be called UPI Lite.
The vision is to make digital payments more popular in rural India where internet connectivity is a problem. People will be able to make Internet Free Payments under 200 Rupees.
The solutions that have been approved by authorities are a SIM overlay and a software-provisioned solution that leverages over-the-air (OTA) updates.
SIM Overlay is a technology that will expand the functions of a SIM Card. It will allow internet free payments. OTA will be focused on delivering solution to firmware of device. OTA will be like snake game that was once very popular in Nokia phones. The game used to get updates over the network. The patent of the technology has not been filed yet but soon steps will be taken.
Monish Shah from Deloitte said, “Small value offline mode for digital payments will provide an alternative, secure, low-cost mode of payments with a near-cash-type characteristic, thereby increasing consumer confidence as a preferred mode for small retail payments.”
RBI posted “Framework for facilitating small value digital payments in offline mode” on January 3.
According to RBI, “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 ₹200 per transaction and an overall limit of ₹2000 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” it further says.