You can soon make UPI payments without internet
What's the story
The National Payments Corporation of India (NPCI) is working on a new feature for Unified Payments Interface (UPI), that would allow users to make payments at merchant point-of-sale terminals without an internet connection. The feature, which uses near-field communication (NFC) technology, will be especially useful in areas with poor or no connectivity such as aircraft cabins and underground train networks, Business Standard has reported.
Operation
How it will work
The new feature will let users make payments of up to ₹2,000 by tapping their NFC-enabled phone on an offline terminal.
To use this service, customers will have to first load money into their on-device UPI Lite wallet while connected to the internet.
They can then use that balance at an offline terminal without entering a UPI PIN.
Certification
NPCI to start certifying PoS devices
The NPCI is expected to start certifying point-of-sale (PoS) devices from leading terminal manufacturers in 2026.
A fintech firm source told Business Standard, "PoS companies will need a certification from NPCI to accept UPI in an offline setting. They can create an application on top of it after they get certified."
This means that only certified terminals will be able to use this new UPI feature.
Payment processing
Payment authorizations will be stored until connectivity is restored
Under this new system, the PoS terminal will store the payment authorization and send it once connectivity is restored.
A source told Business Standard, "This is an NFC-driven use-case for UPI apps. You will tap using the app. Even if the terminal is offline, you can pay up to ₹2,000."
Banks and third-party UPI app providers are also working to integrate this feature into their apps.
Previous solutions
Similar to UPI Lite X
This isn't the first time NPCI has used NFC or documented an offline merchant-payment flow.
The organization launched UPI Lite X in September 2023 for transactions when mobile connectivity is unavailable.
Unlike UPI Lite, which usually requires connectivity but avoids real-time access to the remitter bank's core banking system, Lite X was designed for fully offline payments.
Guidelines
This is how NPCI defined UPI Lite X
NPCI's January 2024 UPI Lite X guidelines showed offline person-to-person payments between NFC-enabled phones and person-to-merchant payments made by tapping an NFC-enabled QR code, soundbox or sticker.
The capability reported now is different in terms of acceptance hardware: the merchant would receive the payment through an NPCI-certified PoS terminal, even when that terminal is disconnected.