 "RBI allows REs to use HDFC Bank-Crunchfish AB's offline payments product")
The Reserve Bank of India (RBI) has given a nod for regulated entities such as banks and non-banking financial companies (NBFCs) to adopt an offline digital payments product made by HDFC Bank in collaboration with Sweden's Crunchfish AB.
"The product of the aforesaid entity (HDFC Bank-Crunchfish AB) has now exited the Regulatory Sandbox (RS) and may be considered for adoption by Regulated Entities subject to compliance with applicable regulatory requirements," RBI said in a notification.
The product ‘Offline Retail Payments' lets customers and merchants transact offline. The solution, which functions in the absence of a network connection, is aimed at enhancing the adoption of digital payments in regions that lack sufficient network capacities.
For instance, as part of the product, merchants can receive an instant payment confirmation in an offline mode. A transaction is settled when a merchant or a customer goes online.
In February this year, HDFC Bank launched the pilot, in partnership with Crunchfish, to test offline digital payments for merchants and customers after the regulator in September 2022 selected the entity under the 'On Tap' application facility for the theme 'Retail Payments' of the Regulatory Sandbox to conduct a 'test phase' of the product.
HDFC Bank had stated that it would roll out this service as part of a limited pilot for four months in over 16 cities and towns across India.
As part of the testing phase, the bank capped the limit of an offline transaction at Rs 200.
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It had partnered with IDFC First Bank to showcase off-us transactions with other banks' customers and merchants. Further, it had enrolled M2P Fintech to build customer and merchant apps for the pilot.
"This innovation will accelerate financial inclusion in remote areas by enabling the adoption of digital payments as both merchants and customers can do transactions without any network. HDFC Bank is committed to bringing more digital innovations and payment solutions to its customers and merchants," Parag Rao, Country Head for Payments Business, Consumer Finance, Digital Banking, and Marketing at HDFC Bank, had said in February.
In 2019, RBI introduced a Regulatory Sandbox to encourage responsible innovation in financial services, promote efficiency, and expand consumer benefits.