Cardless cash withdrawal, which was previously only available at a handful of banks, will now be available at all banks and ATMs. It will be accessible through the Unified Payments Interface (UPI), which will be used to authorize customers. This is anticipated to make transactions more convenient while also reducing fraud.
“To encourage cardless cash withdrawal facility across all banks and ATM networks, it is planned to facilitate client authorization through the usage of UPI,” the Reserve Bank of India (RBI) said on Friday. The ATM networks would handle the settlement of such transactions. NPCI (National Payments Corporation of India), ATM networks, and banks would receive separate instructions soon.”
“In addition to boosting transaction ease, the removal of the need for actual cards for such transactions will help minimize frauds such as card skimming and card cloning, among others,” RBI governor Shaktikanta Das said.
“UPI is being proposed as a method of authentication. Customers can withdraw money from any bank’s ATM or white-label ATMs using this method. We’re figuring out what structural modifications might be required. “The difficulties will crystallize in 2-3 months,” RBI deputy governor T Rabi Sankar remarked.
Customers will be able to withdraw cash using UPI once all banks and ATMs have implemented the service. It will generate a QR code once the amount is entered. The customer must then scan the QR code and enter the pin on their UPI app to complete the cash withdrawal. According to a source, this provides clients with an alternative, reducing their reliance on a single system.
The interchange charge system will not alter, he stated. According to the source, UPI will just serve as a messenger while the settlement is handled by the national financial switch (NFS) network.
One of the most significant achievements of UPI, according to Sumit Gwalani, co-founder of Fi, a neobank, was the facilitation of a standardized flow for secure authentication to a bank account.
While this would improve customer convenience and prevent fraud, experts have expressed concern that it may have an impact on debit cards. At least in smaller towns and rural areas, these cards are mostly used to make cash withdrawals.
Governor Das stated during the post-policy press conference that debit card issuance will not be halted as a result of this. This is since debit cards are used for a variety of purposes other than cash withdrawal.
“Those who can use UPI outdoors will be able to use it to withdraw money from ATMs, which may influence debit card usage.” Its utilization will decrease. However, due to other intertwined dependencies built into the banking system for authorization at call centers or Internet Banking, as well as the change of PIN for UPI, the issuance of debit cards may not decrease,” stated Anand Bajaj, founder, MD, and CEO of PayNearby.
Currently, the country has over 935 million debit cards. Jandhan account holders own more than 316 million debit cards.
“The Reserve Bank of India (RBI) continues to play a key role in advancing digital banking technology while keeping customer comfort in mind. “The RBI’s mandate to permit interoperable, cardless withdrawals utilizing UPI across ATMs is a welcome move in improving customer ease and security of cardless ATM withdrawals,” said K. Paul Thomas, managing director and CEO of ESAF Small Finance Bank.