Indian fintech startup Eroute Technologies is planning to launch an offline payments solution based on the Unified Payment Interface (UPI).
UPI is an instant real-time payment system developed by the country’s flagship payment processor, the National Payments Corporation of India (NPCI).
Eroute said it will facilitate digital payments without requiring an internet connection.
The offline payments technology involves the use of a smart card which acts as a SIM overlay. This technology is already being used in China and Kenya and also tried in Japan.
A feature phone user, after installing the technology, will have access to a SIM toolkit through which they can make fund transfers, and merchant and bill payments.
Eroute co-founder and COO Abhishek Saxena said that the company is eyeing a commercial deployment by mid-2021.
Saxena said: “In India, there are around 500 million feature phone users who can be brought into the digital payments fold using their phones.
“Connectivity is still a challenge in parts of the country and even smartphone users often do not get good internet.
“So, RBI came out with a sandbox and invited companies who have solutions for feature phone users. We are doing a pilot with a limited audience as of today as per the requirement of sandbox.
“Once we get the results, we will then introduce the concept for commercial use. We have worked with NPCI so that users can use UPI on feature phones. The solution is telecom agnostic.”
Currently, Indian users already have an offline payments alternative which involves dialling *99# on their phones to access their UPI-linked accounts via a GSM protocol called USSD.
However, there are certain challenges around its user experience and due to the LTE technology, it is not available for Reliance Jio subscribers.
Saxena added: “USSD has not been successful and right now it is almost at a dead end. There were so many session breaks. User experience was also a big use.”
The latest move comes one month after the startup secured approval from the country’s central bank, the Reserve Bank of India (RBI), to test the offline payments solution.
The solution is said to be part of the first cohort of RBI’s regulatory sandbox on retail payments.
In August 2020, the RBI set up an offline payment system to push digital payment adoption in areas with slow or no internet.