February 24, 2024

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Reserve Bank of India Introduces Framework for Offline Digital Payments

The country’s central bank, the Reserve Bank of India recently issued a statement regarding its new Framework for Facilitating Small Value Digital Payments in Offline Mode, which allows offline digital payments up to IN₹ 200 (US$2.65) per transaction, subject to an overall limit of IN₹ 2,000 (US$26.9). The move is an attempt to boost digital payment penetration in rural and semi-urban areas. An offline digital payment means a transaction that does not require internet or telecom connectivity.

Under the offline mode, payments can be carried out face-to-face (proximity mode) using any channel or instrument like cards, wallets, and mobile devices. These transactions will not require an additional factor of authentication (AFA). Since the transactions are offline, the customer will receive alerts through SMS and/or e-mail. The issuer shall send the transaction alerts to users when the transaction details are received.

There is no compulsion to send an alert for each transaction; however, the details of each transaction shall be adequately conveyed. RBI explained that transactions are subject to an overall limit of IN₹2,000 (US$26.9) for all transactions until the balance in the account is replenished. Balance replenishment can only occur in an online mode. The framework incorporates the feedback received from the pilot experiments on offline transactions conducted in different parts of the country from September 2020 to June 2021, it said.

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. The offline mode of payment can be enabled after obtaining customer consent. RBI noted that the customers will continue to enjoy protection under the provisions of circulars limiting customer liability and will have recourse to the Reserve Bank Integrated Ombudsman Scheme for grievance redress.

Also, such transactions using cards should be allowed without a requirement to switch on the contactless transaction channel. Further, the acquirer should incur all liabilities arising out of technical or transaction security issues at the merchant’s end. RBI has asked all the authorised payment system operators (PSOs) and payment system participants (PSPs) – acquirers and issuers (banks and non-banks) – to ensure compliance with the instructions.

OpenGov Asia reported earlier in December that RBI plans to launch Unified Payment Interface (UPI)-based digital payment solutions for feature phones, eliminating the need for an Internet connection. RBI will also launch an ‘on-device’ wallet in UPI applications, which will simplify the process for small-value transactions. UPI was developed under the Digital India initiative and is run by the RBI. The UPI is a system that powers several bank accounts into a single mobile application (of any participating bank), merging several banking features.

Until now, only smartphone users have been able to use UPI services for payments. India has around 1.2 billion mobile users, and of which only 740 million have smartphones. The UPI service for feature phones, which lack the advanced functionalities of smartphones, is expected to benefit a large number of consumers. Low-value transactions utilise significant system capacity and resources, leading to customer inconvenience because of transaction failures as a result of connectivity issues. The ‘on-device’ wallet will conserve banks’ system resources without any change in the transaction experience.

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Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

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CTC Global Singapore, a premier end-to-end IT solutions provider, is a fully owned subsidiary of ITOCHU Techno-Solutions Corporation (CTC) and ITOCHU Corporation.

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SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

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HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

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IBM is a leading global hybrid cloud and AI, and business services provider. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.

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