The National Payments Corporation of India (NPCI) is building an offline UPI system that could allow low value digital payments without internet connectivity, addressing one of the biggest limitations of India’s digital payments infrastructure.
The proposed system is designed to work even when both the customer’s smartphone and the merchant’s point of sale terminal are offline. Instead of relying on real time bank authentication, it is expected to use Near Field Communication (NFC), secure offline payment tokens and deferred settlement. Users would first store a limited payment value on a compatible smartphone while connected to the internet. During a purchase, payment credentials would be exchanged locally through NFC, with the transaction being settled once either device reconnects to the banking network.
According to reports, NPCI is evaluating the feature for transactions of up to ₹2,000. It is expected to support payments in environments where internet connectivity cannot be guaranteed, including underground metro stations, flights, remote regions and retail locations with weak mobile networks.
The proposed system differs from existing services such as UPI Lite and UPI Lite X. While those products reduce reliance on repeated bank authentication or enable limited offline transactions, NPCI’s latest initiative is aimed specifically at merchant payments, allowing both the customer and the merchant to complete transactions without a live internet connection.
Security remains a key focus of the proposed design. According to reports, NPCI is expected to use secure hardware, cryptographic payment tokens and transaction counters to prevent double spending before settlement. Since only a limited prepaid value would be stored on the device, the financial risk associated with offline payments would also remain limited.
UPI processed more than 24,161 crore transactions worth ₹314 lakh crore during FY26, making it India’s dominant digital payment system. The proposed offline capability is intended to expand that reach further by ensuring digital payments remain possible even when internet connectivity is unavailable, rather than replacing the existing online UPI ecosystem.
Source: Business Standard
