Home / Companies / News /  Visa to enable deeper financial inclusion with offline payments in India

NEW DELHI : Visa, the global leader in digital payments, is driving a Proof of Concept (PoC) for offline digital payments in India. A first for the domestic payments ecosystem, the initiative is led by Visa in partnership with Yes Bank and Axis Bank.

The offline payments technology will allow users to make transactions using chip-based Visa debit, credit, and prepaid cards even in places with low or no internet connectivity.

According to the press release issued on 25 August, extending Visa’s commitment to RBI guidelines on offline payments, the solution is a significant step towards greater financial inclusion across rural, urban and remote areas. The PoC has been executed in partnership with Innoviti in catchment areas in Bengaluru."

This thrust to offline payments underlines the government’s vision of digital and financial inclusion in Digital India. In a country where cards are the most popular instrument of digital payments and customers and merchants are migrating from cash to digital, offline payments can allow deeper percolation in the country. Visa cardholders may soon get to request their banks for a fresh card that enables this solution, the release further said.

The chip will hold a stored value of a daily spend limit of 2,000 and have a per transaction limit of 200, as currently mandated by the RBI. This is akin to having a wallet with a preloaded amount. In the event of insufficient balance, the transaction will be declined, making this proposition suitable for cardholders as well as merchants. Merchants also stand to gain revenue from reduced friction and risk of payment failures. Visa’s solution is the first of its kind and equipped to enter the Indian market.

T.R. Ramachandran, group country manager, India and South Asia, Visa said, “The pandemic’s unprecedented impact has spurred a significant movement in the digital payments ecosystem. With the RBI’s cognizance of low and no connectivity being major impediments to financial inclusion, offline payments have the potential to catalyze digital payments usage even where internet connectivity is a challenge and failed transactions are a top concern. With this solution, Visa aims to work with our clients to see if this can scale with mass adoption."

According to the press release, about 70% of India’s rural population, and 33% of its urban population is yet to adopt a digital mode of payment. This necessitates driving greater inclusion, with offline payments as a feasible solution to connectivity issues. Aligned with this vision, Visa successfully conducted a pilot for offline payments across five villages in Karnataka in December 2020. The pilot was an extension to the RBI’s guidelines issued in August 2020 that allowed payments operators to launch pilot programmes for small value offline payments.

Rajeev Agrawal, managing director and chief executive officer, Innoviti Payment Solutions, India said, "Lack of internet connectivity has limited the democratization of digital payment acceptance in the country, as all existing payment technologies need real-time connectivity for authentication and authorization. Transaction failures arising from low-quality connectivity impact consumer and merchant confidence, further impeding digital payment acceptance. Hence, offline payments are a fast, reliable and low-cost way of solving this problem that can change the way payments happen."

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