Mumbai: Cash withdrawals with smartphones are about to become easier and can be done virtually anywhere. Plans are underway to widen the reach of unified payments interface (UPI)-India’s ubiquitous tool to move money, pay bills, and make online purchases-for taking out cash. Millions of individuals, non-profits, and grocers who act as ‘business correspondents’ (BCs) of high-street banks will have quick response, or QR codes that users can scan with any UPI app on their handsets to withdraw cash.
Today, such UPI-driven cardless cash withdrawals are limited to UPI-enabled automated teller machines (ATMs), besides merchants who can disburse only about ₹1,000 per transaction in towns and cities and ₹2,000 in rural areas. Now, there’s work afoot to extend the facility (of cash withdrawal with UPI) at more than 2 million BCs across the country.
BCs, often located in far-flung and underbanked areas, are extended arms of bank branches providing financial and banking services.
National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in the country, has sought the RBI’s clearance for extending the UPI-based cash withdrawal at BCs, sources in the payments industry told ET. UPI was developed and launched in 2016 by NPCI. When contacted, a senior NPCI official said that the product is at a planning stage and a final decision is yet to be taken.
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An EASIER MECHANISM
The proposed move would deepen the presence of UPI, which is often showcased by the government and authorities as a versatile and commonly-used payment system.
In using the UPI system and QR code to withdraw cash at a BC outlet, the BC gives the cash to the users after the user’s account is debited by amount of cash withdrawn and the BC’s account is credited by the equivalent amount. Currently, customers can also withdraw cash from the micro-ATMs with BCs using ATM cards, though this is comparatively a lesser used mode of transaction. A more common cash withdrawal mechanism, often preferred in rural regions, is the Aadhaar-enabled system where the fingerprints of customers are scanned at the micro-scanner with the BC for biometric authentication to take out cash from their bank account. Here, the fingerprints of a user are matched with the biometric records stored at the Aadhaar server to verify the identity and then send a debit instruction to the customer’s bank before handing over the cash.
“For many, whose fingerprints are not easily readable or those who are not comfortable using ATM cards which can be cloned, scanning QRs to withdraw cash using UPI would be a convenient option. If lakhs to BCs/ATOs are offering the facility, many customers could end up using them instead of walking to ATMs,” said a banker. “However, the utility of ATMs would not go. The machines store more cash and are open round the clock,” he said.
Many regular shops and merchants, equipped with point-of-sale machines where customers swipe their card for purchases, also have separate UPI-backed QR codes to allow customers to withdraw cash. But, only smaller amounts, between ₹1,000 and ₹2,000 depending on the location, can be withdrawn through this system. Compared to this, up to ₹10,000 can be withdrawn per transaction from a BC outlet either using biometrics checks or a swipe of ATM cards. The next transaction, of another ₹10,000 withdrawal, is allowed by the system after a gap of 30 minutes. A similar amount may be permitted through UPI-based cash withdrawal.
A LURKING FEAR
Irrespective of the convenience and reach of letting BCs offer UPI-based cash withdrawal, sections in the industry fear whether an easier cash take-out mechanism could throw further challenges at BCs who are already suffering as cyber thieves withdraw stolen funds. Often, miscreants moving money, either hacked from an account or generated from illicit activities, use a string of bank accounts to transfer the money and obfuscate the trail.
There have been multiple cases where BCs have unwittingly found themselves caught in that chain. Here, the BC, a genuine seller of goods, was paid by UPI. In such situations, law enforcement authorities investigating cyber theft complaints have frozen the bank accounts of payment aggregators, payment gateways, and BCs, along with that of others in the money chain. This has hurt normal activities of several providers, including corporate BCs, who in turn have hundreds of merchants and agents working with them.
“With the SOP of the central agency i4C to Cyber police pending for a year, some fear an easier cash withdrawal could increase such risks. More so, because, unlike biometric authentication, a person doing a UPI-based withdrawal and who wants to hide his identity need not be physically present at the BC centre. Instead, he can send someone else to scan the phone and withdraw money,” said another person.
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