NPCI Plans Offline UPI to Power Digital Payments Beyond Network Limits

• Offline UPI may allow tap-and-pay without internet on phone or PoS.

• Likely limit: about $21 per transaction (₹2,000).

• UPI processed 241.62 billion transactions worth $33.05 trillion in FY26.

• Feature aims to serve metros, flights and low-connectivity regions.

India’s Unified Payments Interface (UPI) handles billions of transactions each month, yet it still depends on live internet access and instant bank verification. This reliance has left digital payments exposed in locations where mobile networks are weak or unavailable.

To close this gap, the National Payments Corporation of India (NPCI) is working on a new offline UPI framework that would allow customers to complete tap-and-pay transactions even when both the smartphone and the merchant’s point-of-sale (PoS) terminal lack connectivity.

Moving Beyond Always-Online Payments

Under the proposed system, users would preload a limited payment balance onto their smartphones while connected to the internet. Once offline, they could make purchases by tapping their device on an NFC-enabled PoS terminal. The payment data would be exchanged directly between the two devices, eliminating the need for real-time authentication.

Both the merchant’s terminal and the customer’s phone would store a record of the transaction. When either device reconnects to the internet, the details would be transmitted to the banking network for final settlement—a mechanism known as deferred settlement.

According to reports, NPCI is evaluating a cap of ₹2,000 per transaction, or roughly $21 at an exchange rate of ₹95 per US dollar. This threshold would limit exposure while making the feature practical for daily purchases in metro stations, aircraft cabins and remote areas where connectivity is unreliable.

Technologies Behind the Proposal

The offline UPI initiative would rely on three main components: Near Field Communication (NFC), offline tokenisation and deferred settlement.

NFC as the communication bridge:

NFC enables two devices to exchange information when placed close together. Already common in contactless card payments and smartphone wallets, it would allow data transfer between the user’s phone and the merchant’s terminal without internet access. Unlike Visa or Mastercard networks, however, final settlement would occur within India’s UPI system.

Offline tokenisation for security:

Traditional UPI transactions verify balances instantly through banks. Offline payments cannot do so. To address this, NPCI plans to use secure payment tokens generated while the device is online. These tokens would represent pre-authorised value and could be used once offline without revealing bank account details.

Because only a limited prepaid amount would be stored, financial risk would remain restricted even if a device were compromised.

Deferred settlement model:

Unlike UPI’s current “authorise-and-settle” structure, the new model would temporarily accept payments offline and reconcile them once connectivity resumes. Similar systems are already used globally in transport networks to ensure continuity during outages.

How It Differs from UPI Lite and Lite X

NPCI has previously introduced UPI Lite and UPI Lite X to streamline smaller payments. UPI Lite allows low-value transactions using a prepaid wallet balance, but merchants still need connectivity. UPI Lite X supports NFC-based offline transfers between compatible devices, primarily for person-to-person payments.

The proposed offline UPI system, by contrast, is designed mainly for merchant transactions and could function even when the merchant’s PoS terminal is offline—making it more suitable for retail outlets and public transport systems.

Safeguards Against Fraud

Offline payments introduce the risk of “double spending,” where the same value could be used more than once before settlement. To mitigate this, NPCI is expected to rely on secure hardware elements, encrypted tokens and transaction counters stored on devices.

Each token would become invalid after use, preventing duplication. Merchant terminals would maintain local logs until reconnection, after which records from both sides would be reconciled before funds are transferred.

The Need for Offline Expansion

The scale of UPI underscores why such a feature is significant. In FY26, UPI processed 24,161.69 crore transactions—equivalent to 241.62 billion payments—valued at ₹314 lakh crore, or approximately $33.05 trillion. Transaction volumes grew 30 percent year-on-year, while total value rose 20.6 percent.

UPI now represents 85 percent of India’s digital payment volumes, handling an average of 66 crore daily transactions—around 660 million payments worth roughly ₹0.86 lakh crore, or about $1.09 billion, every day.

Despite this dominance, the system’s reliance on constant connectivity has remained a structural limitation. NPCI’s proposed offline UPI solution aims to extend digital payments into areas where network access cannot be guaranteed, ensuring that India’s digital payment revolution continues uninterrupted—even when the signal drops.