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What is Digital Payments Index by RBI?

The RBI has constructed a composite Digital Payments Index (DPI) with March 2018 as the base period to capture the extent of digitization of payments across the country. RBI-DPI will be published on the central bank’s website semi-annually from March 2021 onwards, with a lag of four months. It was needed as Digital payments in India have been multiplying. The DPI accurately reflects the penetration and deepening of various digital payment modes.

RBI announced a framework on 3rd January 2022 that allows offline payments of up to Rs. 200 per transaction, subject to a total limit of Rs 2,000, to encourage digital transactions in rural and semi-urban regions. The move is aimed at furthering the efforts of financial inclusion in India. It’ll not only promote the transition to a cashless economy but would also result in increased indirect tax revenue to the government due to a reduction of tax evasion.

It comprises five broad parameters. Each of these parameters has sub-parameters which, in turn, consist of various measurable indicators, RBI said. The five parameters are:

• Payment enablers (weight 25 per cent)
• Payment infrastructure–demand-side factors (10 per cent)
• Payment infrastructure – supply-side factors (15 per cent)
• Payment performance (45 per cent) and
• Consumer centricity (5 per cent)

Some more details about the Digital Payments Index framework

A transaction that does not need internet or telecommunication connectivity is referred to as offline digital payment. In the offline mode, the payment can be made face-to-face through any medium or instrument, such as cards, wallets, and mobile devices. The Reserve Bank of India stated that these transactions would not need an additional factor of authentication (AFA) and that because the transactions occur offline, the payer will get alerts (through SMS and email) after a short time lag. 

Until the account balance is replenished, transactions are subjected to a cap of Rs. 200 per transaction and a total maximum of Rs. 2,000 for all transactions. Only in an online mode can the account balance be replenished. The framework takes into account input from pilot testing on offline transactions that took place in various parts of the country between September 2020 and June 2021. 

According to the “Framework for Facilitating Small Value Digital Payments in Offline Mode”, the offline mode of the transaction can be enabled after getting the customer’s explicit consent. Customers will continue to be protected under the terms of circulars that limit customer liability and will be able to seek redress through the Reserve Bank Integrated Ombudsman Scheme. Such card transactions should be permitted without activating the contactless transaction mechanism.

All liabilities stemming from technical or transaction security vulnerabilities at the merchant’s end will be borne by the acquirer/issuer (banks and non-banks). The issuer must send transaction alerts to customers as soon as transaction data is received. There is no requirement to issue an alert for each transaction; nonetheless, each transaction’s data must be clearly communicated.

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