UPI transaction: India’s Unified Payments Interface will soon allow cash withdrawals. This could revolutionize the way millions of people access their money. National Payments Corporation of India has submitted a proposal to the Reserve Bank of India for enabling QR-code-based cash withdrawals via UPI in over 2 million BC outlets across the country. The move is intended to make accessing cash as easy as a UPI transaction.
Users would be able to use their UPI-enabled app and scan QR codes at local correspondent outlets, authorise the payment instantly, then receive cash. The process is transparent and secure for the BC and the customer, since the BC debits the account of the user while simultaneously crediting the account of the UPI. The proposal, if approved, could improve financial access, especially in semi-urban and rural areas, where ATMs are rare.
A source with knowledge of the proposal stated that “If approved, this could revolutionize the way Indians get cash by making it easy to scan a code in a store.” This initiative is designed to leverage the infrastructure that already exists in banking correspondents who provide financial services for underserved areas. They offer services such as Aadhaar-enabled payments and micro ATM withdrawals.
At the moment, cash withdrawals from merchants using UPI are restricted to Rs1,000-Rs2,000. This limit could be increased to Rs 10,000 per UPI transaction under the new framework, giving users more flexibility. It would benefit those who are unable to perform biometric verification due to worn-out fingerprints, or for anyone concerned with ATM fraud, such as skimming.
Experts in the industry have warned of potential risks. Fraudsters may target unwitting users because of the simplicity of QR withdrawals. There have been concerns raised over the necessity of standardized supervision and robust fraud investigation protocols in order to protect consumers as well as banking correspondents who have been previously implicated in cybercrime. These challenges must be addressed to ensure a safe and successful implementation.
The National Payments Corporation of India is an umbrella organisation for retail payment and settlement systems. NPCI is an initiative of both the Reserve Bank of India and the Indian Banks’ Association. It was set up to create a strong payment and settlement system in India. The Unified Payments Interface, one of its flagship products, has revolutionized the digital payment system in India.
