LIO-PAY: Sustainable low-cost offline payment solution

Abstract

Offline payment solutions exist today to enable customers to avail themselves of the privileges of the cashless economy. Financial inclusion is visualized as a key factor in encouraging digital transactions in rural and semi-urban regions. Recently, the Government of India, along with the Reserve Bank of India, announced a framework that allows offline payments with finite transaction limits. This aims at providing access to formal financial services in an affordable manner to deepen financial inclusion. However, the remote population rarely access their digital bank accounts due to intermittent network connectivity issues. Hence, the majority of these accounts are in a dormant state, which demeans the impact of financial inclusion. The aim of this research is to design and develop a sustainable, low-cost, highly efficient offline payment solution using a LoRa-enabled IoT ecosystem to connect with Space Information Network (SIN). A novel offline payment system is designed with features of a) recharge and b) payment with offline wallet technology, which can be availed of in the absence of Internet or telecommunication services. The proposed solution, LIO-PAY, allows merchants and end users across the ecosystem to run seamless transactions. We developed a proof of concept and tested it in a lab setup with volunteers to analyze the usability of the application for initiating transactions. We examined 46 customer-initiated transactions and found that 16 (around 34.8%) failed due to merchant data entry errors, likely typos. In a separate analysis of these transactions, 4 customers (approximately 11.5%) incorrectly entered their PIN. The average time to complete a transaction was 35.42 s. Bringing satellite payments to life faces hurdles but holds immense promise for the unbanked. Getting the green light from banking authorities and the satellite network provider is no easy feat. Even if approved, launching a whole new satellite network just for low-value transactions might be too expensive. A more realistic approach could be using existing telecom satellites to bounce transaction data to banks. Regulatory approval is needed from both banking authorities and the satellite network provider. Hence, we simulated the SIN environment with seven LEO (Low Earth Orbit) satellites using the Matlab tool. These simulations revealed a transmission time range of 2 min to 1 h, indicating a reasonable timeframe for delivering information to a ground station via SIN. Despite terrestrial networks expanding their reach, satellite-based solutions hold promise for areas with no or weak internet connectivity. This becomes even more attractive if launch costs go down or if banking authorities help subsidize the service to bring financial inclusion to remote regions. Thus, we hope this approach may help researchers and policymakers visualize the possibilities of bridging the gap in financial inclusion.