Offline payment push: Innovation must include stronger consumer protection

NPCI's offline NFC-based UPI can expand digital payments and financial inclusion, but robust security, fraud safeguards and strong consumer protection must underpin its rollout

India’s digital-payment ecosystem is set for another leap with National Payments Corporation of India (NPCI) developing an offline “tap-and-pay” Unified Payments Interface (UPI) feature using near-field communication (NFC), allowing payments of up to ₹2,000 even without internet connectivity. The proposed system will allow users to make payments by simply tapping NFC-enabled devices and capturing the recipient’s UPI ID or Virtual Payment Address (VPA), eliminating the need to scan a quick-response (QR) code. The feature builds on earlier initiatives such as UPI Lite X and seeks to bridge the gap between UPI and contactless card payments. The timing is appropriate. India has emerged as the world’s largest real-time payment market, accounting for nearly half the global real-time payment transactions. UPI continues to grow. It processed 22.71 billion transactions, worth ₹22.02 trillion in June, reflecting the platform’s extraordinary scale and growing acceptance across the economy. According to the Reserve Bank of India’s Payments System Report, the average ticket size of UPI transactions declined from ₹1,848 in 2021 to ₹1,313 in 2025. This indicates that UPI is increasingly being used for routine, low-value purchases, making an offline payment option particularly relevant for everyday retail spending, especially for transactions up to ₹2,000. 

The benefits extend well beyond convenience. Offline NFC payments could enable seamless transactions in flights, metro rail networks, underground transport systems, rural regions with weak connectivity, and disaster-hit areas where communication networks are disrupted. For small merchants, the feature could reduce dependence on cash during temporary network outages, while consumers would enjoy faster checkout experiences in crowded locations such as supermarkets, fuel stations, and public transport. However, offline transactions are verified only after connectivity is restored. This creates vulnerabilities such as double spending, delayed settlement, and merchant disputes if payments fail to synchronise successfully. Lost or stolen devices may also be misused. As offline transactions become more common, these operational and cybersecurity risks could undermine consumer confidence if appropriate safeguards are not established from the outset. 

International experience highlights that the expansion of tap-and-pay systems must be accompanied by stronger security safeguards. According to the United Kingdom (UK) Finance Annual Fraud Report 2026, UK retail face-to-face card fraud, which includes contactless payments, amounted to 86.3 million pounds in 2025. Of this, contactless fraud accounted for 46.8 million pounds, an 8 per cent increase over 2024, underscoring the importance of strong authentication, transaction limits, and fraud monitoring and consumer awareness alongside payment innovation. India should adopt a calibrated approach. The Reserve Bank of India and NPCI must ensure operational readiness in terms of merchant device certification, interoperability standards, cybersecurity protocols, and secure cryptographic authentication. Equally important is building timely grievance redress, which can protect consumers against unauthorised transactions. Extensive pilots across transport networks, retail outlets and rural areas should precede a nationwide rollout. Offline UPI has the potential to make digital payments more resilient and inclusive, but its long-term success depends not merely on technological innovation, but on the strength of the safeguards that underpin it.