Proposed Offline UPI System
๐ Why in News?
๐ข The National Payments Corporation of India (NPCI) is developing an offline UPI payment system using Near Field Communication (NFC) technology.
๐ข It aims to enable tap-and-pay UPI transactions without active internet or mobile network connectivity.
๐ What is the Proposed System?
๐ข It is an advanced contactless payment architecture built on the existing UPI framework.
๐ข It would allow transactions at merchant Point-of-Sale (PoS) terminals even when both the customer and merchant are temporarily offline.
๐ข It can be useful in remote areas, underground metro networks, inflight services and network outages.
๐ How Does It Work?
๐ข Pre-Authorisation: When online, the userโs bank authorises cryptographic tokens or a prepaid balance on the device.
๐ข Offline Transaction: The customer taps the smartphone on an NFC-enabled PoS terminal, enabling local exchange of payment credentials/tokens.
๐ข Deferred Settlement: Transaction records are stored temporarily and are transmitted to NPCI when connectivity is restored for final bank-to-bank settlement.
๐ Key Features
๐ข Dual-Offline Capability: Enables transactions even when both the smartphone and merchant terminal lack network connectivity.
๐ข Cryptographic Tokenisation: Uses pre-authorised, potentially single-use tokens instead of continuously accessing the userโs bank balance.
๐ข Transaction Limit: Designed for transactions of up to โน2,000 per transaction.
๐ข Store-and-Forward Model: Allows merchants to continue accepting payments during temporary network disruptions.
๐ Prelims Focus
๐ข NPCI โ Retail payment infrastructure in India
๐ข Technology โ NFC-based tap-and-pay
๐ข Offline Model โ Pre-authorisation โ Local exchange โ Deferred settlement
๐ข UPI โ Unified Payments Interface
๐ข Proposed limit โ Up to โน2,000 per transaction
@BEYONDPSI
4August 29, 2026 1.1K 3
