Offline UPI Payments to Use NFC Tap-to-Pay Technology

Key Facts

• NPCI (National Payments Corporation of India) is developing an offline UPI payment system using NFC tap-to-pay technology.
• The offline NFC-based UPI payments will allow transactions up to ₹2,000 per transaction without requiring internet connectivity on both the customer's mobile device and the merchant's point-of-sale terminal.
• This system builds on existing offline payment methods in India including UPI Lite, UPI Lite X (launched in September 2023 for NFC-based offline payments between smartphones), and the USSD-based 99# service, which supports basic UPI functions without internet on feature phones.
• NPCI plans to certify NFC-compatible point-of-sale devices from major manufacturers by 2026 to support this offline payment feature.

Background & Context

Unified Payments Interface (UPI) is India's real-time payment system enabling bank-to-bank transfers via mobile applications but requires internet connectivity. To support digital payments in low or no connectivity areas, several offline modes exist: UPI Lite (an on-device wallet-based payment mode), UPI Lite X (introduced in September 2023 for NFC-based off-network phone-to-phone payments), and the USSD-based 99# service that allows basic UPI transactions on feature phones without internet.

The new offline merchant-facing UPI using NFC will extend contactless tap-to-pay payments to point-of-sale terminals that lack internet access. Users will preload money into their on-device UPI Lite wallet while online, then use NFC tap-to-pay at compatible offline terminals. This feature is especially relevant in locations like aircraft cabins, underground metro stations, and remote retail outlets where internet access is limited or disruptive.

Why This Matters for Exams / Exam Relevance

For competitive exams covering India's financial technology and digital banking ecosystem, key topics include NPCI's role in managing UPI, advancements in offline digital payments using technologies like NFC, and the policy and technical frameworks supporting financial inclusion. Understanding the chronology—such as the launch of UPI Lite X in September 2023 and anticipated device certifications by 2026—is important. Exam questions may also focus on transaction limits, offline use-cases (e.g., metro, aircraft), and the interplay between different offline payment modes like UPI Lite, 99#, and the new NFC-based tap-to-pay merchant system.

Points to Remember

• NPCI stands for National Payments Corporation of India and manages the UPI ecosystem.
• Near-Field Communication (NFC) is a short-range wireless communication technology enabling contactless payments via smartphones, cards, and terminals.
• UPI Lite X, launched in September 2023, allows offline NFC-based payments between two smartphones.
• The USSD-based 99# service enables basic offline UPI functions without internet access on feature phones and basic mobile networks.
• The new offline merchant NFC payments system will have a per-transaction limit of ₹2,000.
• NPCI plans to certify compatible point-of-sale devices by 2026 to facilitate offline NFC UPI payments at merchant locations.
• Offline UPI payments address payment challenges in locations with limited or no internet connectivity such as metro stations and airplane cabins.