Why cardless cash withdrawals from a bank’s ATM can curb frauds

Recently, the RBI, under development measures in its monetary policy statement, announced that card-less cash withdrawals will be enabled across all banks and ATM networks using UPI. This will lead to innumerable benefits for the users including enhanced security.

How will it work? 

This method will not require a customer to use a debit/credit card for withdrawing cash. Instead, to complete a card-less cash withdrawal on the ATM, a customer can simply scan the UPIQR code generated on the ATM screen and enter an authorisation PIN on the bank’s mobile application. The UPI QR based card-less cash withdrawal on a bank ATM was first introduced in 2019 by an integrated omni-channel payments solutions company.

How will it benefit customers? 

The biggest benefit of this solution is the ease of transactions for customers. For instance, a customer need not worry about carrying a debit card to the ATM as the entire transaction is completed using the mobile phone. Moreover, new age customers look for convenience and swift cash withdrawals, without having to worry about carrying multiple cards. A solution like this addresses this concern.

Additionally, both urban & rural citizens, especially new-age customers are comfortable making UPIQR based transactions using their smartphones and it has become a part of their day-to-day life. Extending such a solution to ATMs/CRMs will bring added convenience to the end-users.

With the phenomenal growth of smartphones and internet connectivity even in rural areas today, there is huge opportunity for ATM players and banks to cater to this population. As this card-less cash withdrawal solution is interoperable – meaning a user of X Bank can withdraw cash from Y Bank’s ATM, it will bring ease of transactions to rural citizens.

Another benefit is the increased safety and security while transacting on an ATM which will result in strengthening customer confidence. As the customer does not need a debit/credit card, the chances of card-based frauds are negated. Moreover, as the transaction will take place on the secure network of UPI, the customers will have an increased faith while withdrawing cash.

This solution will also benefit teenagers and students as Gen Z/millennials, as they are open to newer options which enable safe and swift transactions – testimony is the growth of UPI. In addition, this will relieve parents and guardians of the fear of card theft.

UPI has been a gamechanger for India’s digital payments sector. The seamless integration of digital (through UPIQR) & physical through interoperable cash withdrawal feature will play an important role in achieving financial inclusion. Further, the urban citizens will also whole-heartedly accept this solution owing to the growing preference for contactless transactions. 

In conclusion, the change in form factor – from debit card to mobile, will go a long way in bringing convenience to banking customers across urban and rural areas of India. It will further contribute towards a safe & secure growth of the payment ecosystem – especially ATMs & CRMs.

Stanley Johnson

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Stanley Johnson is the Executive Director at AGS Transact Technologies Ltd.