Offline Digital Payments – Progress in the Digital Age
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As of January 28 2022, the Currency in Circulation (CIC) stood at Rs 3,004,604 crore, almost double the CIC (Rs 1,310,181 crore) during the demonetisation time in FY17. On January 3 2022, the Reserve Bank of India (RBI) immediately introduced offline payments via cards, mobile devices, and wallets.

When you make an offline payment, it does not mean there is no data exchange happening. The card details mentioned on the magnetic stripe will be read when you swipe your card on a point-of-sale (PoS) terminal at a merchant outlet. Your transaction will be settled a little later. In simple words, the transaction will be initiated on a real-time basis, but the settlement will take place with a delay.

Digital transactions witnessed a single-digit growth before 2010; the transactions rose to 28% between 2010 and 2016 doubled to 56% between 2016 and 17 due to demonetisation. Due to the COVID-19 pandemic, people shifted to digital payments. As part of RBI’s pilot scheme, in December 2020, five villages were adopted in Karnataka. YES Bank and Visa collaborated to test digital payments using feature phones in a non-internet setting.

Digital retail payments have already witnessed a 400% growth in the last five years. It is expected to quadruple in the following five years and reach the $1-trillion mark. With offline payments, regional rural markets could also be part of the digital payments race and increase digital transactions.

The National Payments Corporation of India (NPCI) has developed the National Common Mobility Card (NCMC) interface. NCMC will enable the ‘One-Nation-One-Card’ activation concerning on-the-go payments. According to a recent study, the estimated cost of cash handling stands between 4.5% and 12%; for digital payments, it is between 2% and 3%. The lower internet data cost and higher smartphone usage will surely fuel offline payments.

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