I must say again, that it is a financial system thing, rather than a Revolut-specific thing.
Revolut has not decided to forbid offline transactions. It is the retailers who have.
Every single retail financial institution that issues pre-paid debit cards (From Revolut, to Monese, to Tide, …) will have this limitation.
This limitation is not imposed by Revolut, but inherent in the financial system itself.
It has nothing to do with Revolut pre-authorising or ‘not trusting you’ or preventing offline transactions due to the increased risk of fraud.
It has to do with the providers themselves (The toll booths, the petrol pumps, the in-flight stores on aeroplanes, …) deciding to reject debit cards.
TfL (if I recall correctly.) uses an offline transactions system but they accept pre-paid debit cards. The onus on accepting pre-paid debit cards is on them, and they have decided to accept pre-paid debit cards. It is not the retail financial institutions who can force them to accept it.
The reason why ‘online’ (as in, connected to the payments network, and not ‘online’ as in e-commerce.) transactions are more ‘trusted’/secure than offline transactions is because the payments terminal directly connects to the payments network and can validate the validity of the debit card, and ensure that the card has enough money.
Certain retailers have decided to accept offline transactions, for reasons of cost-cutting (Might not have been feasible to install an ‘online’ link due to low foot traffic.) or remoteness (Bandwidth might’ve been expensive back then.).
Due to the pre-paid nature of debit cards, these debit cards are normally self-standing. Historically, there has been a light-touch regulatory approach where people can buy and load money on pre-paid debit cards without submitting too much information.
Therefore, unlike a ‘full’ debit card or a credit card, where a financial institution has your contact details and documents verifying your identity (as part of the KYC/IDV process.), users of pre-paid debit cards have historically been relatively anonymous.
The risk of fraud arises where someone does a transaction with an ‘offline’ terminal but it turns out that the card has an insufficient balance. Due to the payments terminal being offline, it will only connect to the payments network and verify at certain intervals.
If the pre-paid card has insufficient balance, they would be unable to follow up on the missing amount with the bank.
The limitations of a pre-paid debit card are clear, and it is an annoyance to a users who need to conduct transactions with offline terminals whilst holidaying.
2 solutions:
-1) Obtain a Mastercard Principal Membership Licence: As an issuer, Revolut will be able to issue full debit cards.
-2) Obtain a UK banking licence: As a fully-authorised UK bank (as opposed to an eMoney institution.), they’ll be able to issue their own debit cards.
Given how the UK banking licence appears to be at the exploratory stage, #1 appears to be the closest solution (in terms of time.).