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Digital Revolution 2.0: The Offline UPI Move and Its Impact

By Vishal Maru

The Unified Payments Interface (UPI) is one of the leading technological innovations of recent times. It has redefined the way financial transactions take place in India. Now, with the introduction of “offline UPI,” the digital payments revolution in the country has received a significant boost.

Offline UPI has the potential to change the financial system and presents numerous opportunities and ways to improve efficiency, which require a thorough exploration. This article takes a holistic look at the concept of offline UPI and its growing impact on India’s digital payment landscape.

What is offline UPI?

Offline UPI is a pioneering service accessible through the Unstructured Supplementary Service Data (USSD) code *99#. It provides access to the Unified Payments Interface without an internet connection. The service is a collaborative effort involving leading banks and four telecom service providers in India. The result is an inclusive and accessible platform for digital transactions.

To further enhance its accessibility, *99# is available in 13 different languages. It includes English and Hindi to cater to a diverse user base nationwide. Facilitated by the National Payments Corporation of India (NPCI), this service simplifies UPI transactions. It enables users to dial the USSD code from their registered mobile phone number and navigate an interactive menu on their mobile screens.

Currently, this service has a transaction limit of  ₹5,000 and a nominal charge of ₹0.50 per transaction. It is thus a convenient option for individuals seeking seamless digital payments.

Benefits of offline UPI

Offline UPI offers several benefits that make digital payments more useful, including:

  • Universal accessibility: Using USSD as the access channel, offline UPI remains accessible on all Global System for Mobile Communications (GSM) handsets. It doesn’t matter whether they are smartphones or basic feature phones. Universality ensures the service reaches even the most remote and diverse user demographics.
  • User-friendly interface: Offline UPI employs menu-based applications that are user-friendly and intuitive. Even those with minimal digital payment experience can easily navigate and complete transactions.
  • Data independence: Offline UPI does not rely on data connectivity but operates on the signalling channel. This feature ensures high availability, making the service accessible to users in areas with limited or unreliable internet access.
  • 24/7 availability: Offline UPI functions round the clock, including holidays. It ensures uninterrupted access to financial services.
  • Standard USSD code (*99#): Using a standard USSD code, *99#, across specific GSM operators and mobile handsets simplifies the payment process. It makes it easier for users to access the service and removes the need to remember many codes for different banks.
  • Promoting financial inclusion: The Offline UPI service is an additional channel for using the Bharat Interface for Money (BHIM) app. So, it plays a crucial role in promoting financial inclusion in India. Additionally, this service fills the gap for people who require access to traditional banking. It provides financial access and opportunities for a larger part of the population.

The growing impact of UPI on the Indian economy

UPI has emerged as a driver of change within the Indian economy. It highlights a transformative shift in the way financial transactions take place. In October 2023, UPI achieved a significant milestone by surpassing the value of UPI transactions of Rs. 17.6 lakh crores.

The rise in transaction volumes underscores the increasing acceptance of UPI across the country. UPI’s great success comes from its ability to provide instant payments, ensuring a smooth transaction experience for users. It’s widely used for different purposes, from person-to-person transfers to payments at local stores. These factors make it a top choice for millions of Indians who value the convenience of digital payments.

Beyond the number of transactions, UPI is making India a leader in digital finance. Its significant growth shows a change in how people use digital finance for their daily transactions. Its quick adoption also brings financial services to a wider range of people, promoting inclusion in digital payment systems.

Future growth prospects of offline payments

The NPCI remains committed to providing innovative and user-friendly payment mechanisms as the payments sector advances. These will encourage the adoption of digital transactions even in the most remote and cash-reliant regions. In a nation where cash transactions still hold substantial prominence, offline UPI can play a critical role in accelerating the adoption of online payments. There will also be a reduced reliance on physical currency.

The strategic focus of the initiative is to extend the reach of offline digital payments to semi-urban and rural populations. This will help address the financial inclusion gap and enhance awareness of this payment method. In a country where internet and telecom connections can sometimes be unreliable, the possibility of offline payments becoming popular in cities looks promising.

Embracing the future of payments: Offline UPI and beyond

Offline UPI has unlocked new possibilities for financial inclusion and accelerating digital payments in India. With its universal accessibility and data independence, offline UPI showcases the transformative power of technology in revolutionising financial transactions. Its remarkable growth showcases India’s leadership in global financial technology due to the increasing adoption of digital payments.

 

(The author is Vishal Maru, Executive Vice President – Sales, Worldline, and the views expressed in this article are his own)