In an effort to combat financial fraud, the Reserve Bank of India (
Unified Payments Interface (UPI) is an instant payment system developed by the National Payments Corporation of India (NPCI), an entity regulated by the RBI. UPI is built on the IMPS infrastructure and allows you to instantly transfer money between two parties’ bank accounts.
Cardless withdrawal facility is already provided by State Bank of India (SBI), ICICI Bank, Kotak Mahindra Bank, Bank of Baroda (BoB) and RBL Bank but only to their customers on the same ATM network. RBI’s proposal is to make the service available to all bank customers at all ATMs.
“In addition to improving the ease of transactions, the absence of the need for a physical card for such transactions would help prevent fraud such as card skimming, card cloning, etc.,” said the Governor Shaktikanta Das in a statement on April 3.
How will cardless transactions work?
The basic idea of a cardless transaction is to send money from a bank account to anyone in India who has a valid mobile phone number. the recipient, then withdraws money from the ATM without using a debit card or ATM. It can be used to make withdrawals from any bank ATM, third party ATM or white label ATM.
Although the RBI has yet to issue guidelines for NCPI and banks on interoperable cardless withdrawals through the UPI network, there are a few options available in the market based on which the facility can be initiated.
ATM company AGS Transact has piloted a UPI-based candle withdrawal system service that allows the customer to use the banking app to scan a QR code on the ATM screen. In a second model, currently used by SBI for its YONO application, the customer logs into the banking application and enters the amount to be withdrawn; the app generates a transaction number and a six-digit PIN to withdraw the money.
Will debit cards become obsolete?
At a press conference on April 8, the RBI clarified that the central bank would not stop issuing credit or debit cards as it has many other public services. They are not only used for cash withdrawals, they can be used in a restaurant, a store or for payments in a foreign country. Credit and debit cards will therefore be maintained, he added. So, debit cards are here to stay.