Offline Retail Digital Payments To Give A Leg-Up To Internet Connectivity In Rural Areas

The introduction of a framework for retail digital payments in the offline mode is likely to give a leg-up to financial inclusion. In the monetary policy announced last week, the Reserve Bank of India (RBI) introduced this across the country.

“The introduction of digital payments in offline mode is a great move and will facilitate the goal of delivering financial inclusion to the last mile,” says Nipun Jain, CEO, RapiPay Fintech, a fintech company in the assisted payments category. RBI’s new framework for retail digital payment in offline mode is much required as internet connectivity gets erratic in rural areas and hampers digital transaction sometimes, he adds.

According to Jain, other offline payment options such as Aadhaar-enabled Payment System (AEPS) and micro-ATMs were instrumental in facilitating cash withdrawals during the current pandemic, especially for the withdrawal of the government’s disbursement of Rs 1.75 lakh crore into Jan Dhan accounts of workers, labourers, and farmers who were out of work and needed cash. “Going ahead, the new measure (offline retail digital payment) is expected to ensure continuous innovation in the fintech ecosystem of our country,” says Jain.

It may be noted that three successful pilots for offline retail digital payments have been conducted by the central bank in different parts of India between September 2020 and June 2021, covering 2.41 lakh small-value transactions, with a value of Rs 1.16 crore. Also, in August 2020, RBI allowed small-value offline transactions through cards and mobile devices. The upper limit for single payments was Rs 200.

Offline payments could be possible through cards, wallets and mobile devices. “Phone call- and SMS-based UPI payments will also make this possible,” says Reeju Datta, co-founder, Cashfree Payments, a payment disbursal platform used by businesses to do bulk payouts.

He adds that in rural India and remote places, internet access is still restricted or slow. Introduction of offline digital payment would mean close to 100 per cent coverage in terms of access to digital payments. Even as this has the potential to further formalize the economy, how such payment systems will be adopted is something that needs to be seen. “However, user experience-wise, internet-based payment is better, so we may not see adoption in cities,” he adds.

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