UPI may soon let you make payments without internet: Here’s how it will work

UPI users may soon be able to make payments even when there is no internet connection. Business Standard reports that the National Payments Corporation of India (NPCI) is working on an NFC-based offline payment system. The feature is still under development, but it is expected to let users pay merchants without relying on mobile data or Wi-Fi. Also Read: Digital India completes 11 years: PM Modi highlights AI, startups and digital growth

It is expected to work on NFC-enabled smartphones and compatible point-of-sale (PoS) machines. While NPCI has not officially announced the feature yet, the report says offline transactions could be capped at Rs 2,000. Also Read: PhonePe may charge Rs 100 fee: Here's how to avoid it

How the offline payment feature is expected to work

According to Business Standard, users will first need to add money to their UPI Lite wallet while connected to the internet. Once the wallet has been loaded, payments can be made offline by simply tapping an NFC-enabled smartphone on a compatible merchant PoS terminal. Also Read: Aadhaar linked to multiple bank accounts? Here's how to check

Since the money will come from the preloaded UPI Lite balance, users are not expected to enter their UPI PIN during the transaction. The merchant’s PoS terminal is expected to store the transaction details and sync them with the banking network when internet connectivity becomes available. This means neither the customer’s phone nor the merchant’s terminal would need to be online while the payment is being made.

Where it could be useful

The feature is expected to make UPI more reliable in places where internet connectivity is weak or unavailable, including underground Metro stations, flights, rural areas, crowded venues and large buildings. These are places where UPI transactions can fail simply because the internet or mobile network isn’t available. An offline NFC-based system could help users complete payments without having to wait for the network to return.

How it is different from existing offline UPI options

Offline UPI payments aren’t entirely new. Services such as *99# and UPI 123Pay are already available, but both still rely on a mobile network. That means payments can still fail in places where there is no cellular coverage.

The *99# service uses USSD, where users dial a code, choose the payment option and enter their UPI PIN to complete the transaction. UPI 123Pay is meant for feature phones and lets users pay through an interactive voice response (IVR) system instead of a smartphone app.

NPCI also introduced UPI Lite X in 2023, allowing offline payments between two NFC-enabled smartphones. The new feature is expected to take that a step further by allowing customers to make offline payments directly at compatible merchant PoS terminals instead of requiring another smartphone.

What happens before the rollout

According to the Business Standard report, NPCI is expected to begin certifying PoS devices from major manufacturers later this year so they can support offline NFC payments. Banks and third-party UPI apps are also expected to integrate the capability into their platforms before the feature becomes available to users.

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NPCI has not officially announced the feature yet, and there is no word on when it could be rolled out. The payment body is also yet to release detailed guidelines on how the offline NFC system will work.