RBI enhances transactions limits for small value digital payments to ₹500. Details here

The Reserve Bank of India (RBI) has announced to enhance transaction limits for small value digital payments in offline mode to ₹500 from the earlier cap of ₹200.

This effectively means that transacting parties can carry out digital transactions amounting to ₹500 each in the offline mode.

This is done in the follow-up of the earlier circulardated January 3, 2022 on “Framework for Facilitating Small Value Digital Payments in Offline Mode”.

It is worth pointing out here that the Reserve Bank of India (RBI) on Aug 6, 2020 permitted a pilot to encourage technological innovations that enable small value digital transactions in offline mode.

That time, it was decided that the decision on formalising such a system would be based on the experience gained.

As a result of which, a pilot was run by a number of entities between Sept 2020 to July 2021. These pilots, as expected, gave encouraging feedback from the pilots.

Following this, it was announced in a statement dated Oct 8, 2021 that a framework would be introduced for carrying out small value digital payments in offline mode across the country.

Finally, on Jan 3, 2022 a framework was indeed introduced to enable small value digital payments in the offline mode. This can be done using cards, wallets and mobile devices via Authorised Payment System Operators (PSOs) and Payment System Participants (PSPs), as directed by the banking regulator inits circular released in Jan last year.

How do offline transactions take place?

These can be made using any channel or instruments such as cards, wallets, mobile devices etc. These payments are meant to be made in face-to-face mode only. The RBI had also stated that the payment instruments shall be enabled for offline transactions based on explicit consent of the customer.

These transactions using cards will be allowed without a requirement to switch on the contactless transaction channel.

Although the upper limit of an offline payment transaction shall be ₹500, the total limit on a payment instrument will be ₹2,000 at any point in time. And the replenishment of used limits shall be allowed only in online mode with AFA.

The issuer needs to send transaction alerts to users as soon as transaction details are received and there is no compulsion to send alerts for each transaction, however, details of each transaction will be adequately conveyed.