NPCI sets Oct 31 as deadline to activate offline payments on RuPay cards

The move will breathe life into the RBI's January 3 framework which sought to give a fillip to offline payments and lead to the activation of the One Nation, One Card for on-the-go payments

The National Payments Corporation of India (NPCI) has set October 31 as the deadline for banks to activate offline transactions on RuPay cards, which will happen faster than a blink of an eye: at 500 milliseconds.

The move will breathe life into the Reserve Bank of India’s (RBI’s) January 3 framework which sought to give a fillip to offline payments and lead to the activation of the One Nation, One Card for on-the-go payments.

While the no-sizing study has been done on offline volume payments, it can go a long way in reducing cash in circulation in the economy.

An offline digital payment does not require internet or telecommunication connectivity. The card details on the chip will be read when it is swiped at any merchant outlet’s point-of-sale (PoS) terminal. The initiation of a transaction happens real-time, but the settlement is with a lag.

An example of this is when you pay for your Metro ride in the absence of zero internet connectivity —simply tap the card, the terminal reads the pre-funded balance.

Transactions are to be capped at Rs 200 with an overall limit of Rs 2,000, after which the balance in the account is to be replenished by the customer. But balance replenishment can only occur in the online mode.

Such payments can be carried out face-to-face (proximity mode) using any channel, or through cards, wallets, and mobile devices. They will also not call for an additional factor of authentication. Since the transactions are offline, alerts (by way of text messages and/or email) will be received by the customer after a time gap.

By the end of the NPCI’s October 31 deadline, banks will have to be compliant with the National Common Mobility Card (NCMC) protocols — key to One Nation, One Card.

RuPay cards not compliant will have to be re-carded. Also, existing RuPay card holders not having NCMC have to be given options to opt for it across customer touchpoints.

“To support and participate in NCMC programmes for transit operators and ensure low-value retail payments are done seamlessly, all member banks have to get certified with NPCI on qSPARC specifications,” said NPCI.

qSPARC is both a contact and contactless specification for banks to issue cards and merchant acquirers to build PoS and acquiring solutions. Built to enable interoperability, it helps to knit transactions on modes of transport as well. It enables quicker online (high-value) and offline (low-value) transactions. It also eliminates the need for having closed loop transit cards and caters to the needs of transport operators. These specifications are in adoption mode by almost all public transport operators in the country.

The main solutions provider for qSPARC specifications is Paycraft, which was also part of the NPCI committee that co-authored the NCMC specifications.

The groundwork for offline payments started in December 2020 when five villages were adopted in Karnataka as part of the RBI’s pilot scheme.

Visa and YES Bank (with the latter’s digital wallet Yuva Pay) teamed up to test digital payments via feature phones in a non-internet setting.

The RBI’s January 3 framework for offline payments had incorporated the feedback received from pilots conducted between September 2020 and June 2021.

ON-THE-GO GETS A LEG-UP

1. Offline payments will help cut cash-in-circulation
2. Leg-up for small-ticket and on-the-go payments which can be put through in 500 milliseconds
3. Banks will have to be compliant with National Common Mobility Card (NCMC) protocols — key to One Nation, One Card
4. Non-NCMC-compliant RuPay cards have to be re-carded; existing card holders not having NCMC have to be given options to opt for it across touchpoints