Visa has published a research paper exploring an offline payment system (OPS) protocol for central bank digital currencies (CBDC) that would enable users to make digital payments to other users even when both sender and recipient are temporarily offline or unable to connect to a bank, payment network or other intermediary.
The 21-page paper explains how the OPS protocol “can be used to instantly complete a transaction involving any form of digital currency over a point-to-point channel without communicating with any payment intermediary”, and how an offline capability for CBDCs can be developed and secured using a two-tier hierarchical trust infrastructure.
“The protocol allows digital money to be directly downloaded onto a personal device, such as a smartphone or tablet,” Visa’s Cuy Sheffield explains in a blogpost.
“The money is stored on a secure hardware embedded in that device and managed by a wallet provider (eg a bank).
“CBDC can be transacted from one device to another device directly without any intermediaries such as banks, payment networks or payment processors.
“Examples of the underlying technology that can support point-to-point payments include Bluetooth and near field communication (NFC).
“The offline payment system, put simply, creates an experience similar to physical cash. But instead of paper in your wallet, it’s bits and bytes in your phone.
“You can imagine this functionality being useful where internet connectivity is intermittent and a user may only gain full connectivity periodically, say by visiting a local internet café.”
The ‘Towards a Two-Tier Hierarchical Infrastructure: An Offline Payment Service for Central Bank Digital Currencies’ research paper is available to download here.