UPI May Allow Offline Payments At PoS Terminals, Opening Doors For Flights And Metro Travel

India is developing a new capability that could let users make UPI payments without an internet connection on either their smartphones or merchant payment terminals. The facility is expected to support transactions in places such as flights and underground metro systems, according to a news report by the Business Standard.

Offline UPI Payments At PoS Terminals

The National Payments Corporation of India (NPCI), which operates the UPI network, is likely to certify point-of-sale (PoS) terminals of leading merchant device manufacturers for offline UPI payments this year. Once available, users could tap their phones at compatible terminals using near-field communication (NFC) technology to complete payments.

The proposed facility is expected to initially cap transactions at Rs 2,000. The process would be similar to tapping a debit or credit card at a payment terminal.

How The New Payment System May Work

The payment would be authorised on the user's device and captured by the PoS terminal even when there is no active internet connection. The transaction would then be sent for verification once the device or terminal reconnects to the network.

The system is expected to use UPI Lite, an on-device wallet that allows users to make smaller payments without entering their UPI PIN for every transaction. Users would be able to load money into their UPI Lite wallet and use the balance in situations where both their phone and the merchant's payment terminal are offline.

The use of NFC would allow customers to tap their phones on compatible PoS terminals rather than enter their mobile personal identification numbers (MPINs) during the payment process.

Banks And UPI Apps Prepare For The Facility

Banks and third-party UPI payment providers are also working to add the facility to their applications. PoS companies would need certification from NPCI before their terminals can accept UPI payments in offline conditions.

A PoS terminal is a hardware device used by merchants to accept different forms of digital payments, including debit and credit cards, prepaid payment instrument cards and mobile wallets.

UPI Lite X Already Supports Offline Transactions

NPCI has previously used NFC to support offline UPI transactions. In 2023, it introduced UPI Lite X, through which users are able to make payments between two NFC-enabled smartphones without any internet connection.

The proposed update will extend offline UPI payments to merchant PoS terminals, potentially addressing a gap between UPI and card-based payments, as cards support offline transactions through chip-based authorisation.

Use In Flights And Underground Transport

This facility, once fully accessed, will make it possible to make payments during air travel, and/or in underground transport networks, where internet connectivity is unavailable or unreliable.

UPI recorded 22.71 billion transactions worth Rs 22.02 trillion in June, highlighting the scale of the payments network as offline capabilities are being developed further.