UPI Cash Withdrawals
Soon with unified payments interface (UPI), people will be allowed to withdraw cash conveniently. Once this system is initiated it will result in trouble for the primary source of withdrawing cash Debit Cards.
At the present time, users can avail of UPI benefits to transfers and receive money through both online and offline mediums but cash withdrawals are still not allowed at ATMs. This is the flaw that RBI wants to fix, for the convenience of UPI users. In Fact, few banks allow their customers to perform cardless transactions at their own ATMs.
Banking sector solution provider, MD of Sarvatra Technologies, Mandar Agashe said, “Today, the maximum usage of a debit card is at ATMs. So definitely that usage may come down to be replaced by UPI.”
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Debit Card And UPI
RBI data shows that customers have executed ₹2.55 trillion worth of transactions with Debit Cards in February.
Merchants are also in favor of UPI payments, they prefer this cardless transaction method as there are no MDR charges involved. Merchant Discount Rate (MDR) is the charge paid by the merchants to the bank, card network provider, offline transaction provider, and payment gateway transaction.
Mr. Agashe said, “Sellers get immediate settlements on UPI, whereas on cards the money comes the next day to the merchant. It comes in four or five cycles and usually with a lag based on the settlement cycle.”
ATMs Need To Be Modified
For UPI cash withdrawal services to be fully functional, ATMs will need a software update and there will be no need for large expenditure costs for banks.
As for the practical approach, private sector lender City Union Bank has executed the process of UPI cash withdrawals and has partnered with ATM maker NCR India. The current limit per transaction is set to ₹5000, and two such transactions are only allowed per day.