Offline transaction

An Offline Transaction occurs when a payment is accepted without a current network connection to authorize it electronically at the point of sale. This situation commonly arises in areas with unreliable network services or during temporary connectivity failures. In such cases, the payment terminal stores the transaction data to process later when the network becomes available.

The handling of offline transactions can differ significantly between credit cards and debit cards. Debit cards typically decline transactions when they cannot connect to the network for authorization because the exact account balance must be checked to ensure sufficient funds are available before approving the transaction.

In contrast, most credit cards are configured to approve transactions within a certain small amount limit offline. This flexibility is possible due to the nature of credit transactions, which do not require immediate deduction from a specific balance and thus entail less risk of non-payment due to insufficient funds. The set limit for offline credit card approvals is determined by the issuer and is based on the perceived risk and typical spending patterns of the cardholder.

While offline transactions enable continued sales and convenience in areas of poor connectivity, they also carry inherent risks such as delayed discovery of insufficient funds or fraudulent activity. Therefore, merchants and financial institutions must manage these transactions with additional security measures and post-transaction verification processes to mitigate potential risks associated with delayed authorization.