The pandemic played an important role in boosting India’s payments sector making digital payments ubiquitous across the nation. Micropayments via UPI have become the norm across the length and breadth of the country. This unprecedented digital transformation got a further fillip with the recent RBI directive on interoperable cardless cash withdrawals at ATMs using UPI.
A circular issued by the Reserve Bank of India (RBI) on May 19, 2023, stated, “All banks, ATM networks, and white label ATM operators may provide the option of interoperable cardless cash withdrawal (ICCW) at their ATMs.”
ICCW Will Make Withdrawing Money from ATMs Easier
When implemented, Interoperable Cardless Cash Withdrawal (ICCW) enables users to withdraw money from ATMs simply by using their UPI apps. One can scan the QR code on the ATM using any UPI App and authorize a transaction using their UPI PIN on the App installed on their smartphone. This is a game-changer in many ways.
Firstly, it benefits millions of those customers who either do not have or carry a debit card. These customers who do not have a debit card are invariably forced to visit a bank branch to withdraw cash. ICCW saves them the trouble of going to a bank branch by enabling them to transact at the ubiquitous interoperable ATMs. Secondly, cardless withdrawals eliminate the risk of card skimming or card cloning. Since ICCW is a contactless mechanism with double authentication, it can significantly enhance the security of transactions.
Despite the Advancement of Digitization, Cardless Cash is Still an Important Part of the Indian Economy
For a digitally adept user, using ICCW is very intuitive and easy. As digital payments are already popular across urban markets and among educated youth in the semi-urban and rural markets of India, the adoption of ICCW should be quick. However, to take the benefits of contactless transactions to the large population living in semi-urban and rural areas or to people unfamiliar with digital transactions via UPI, it’s important to consider the launching of an alternate cardless withdrawal mechanism using Aadhar.
The rapid growth of ATMs in semi-urban and rural areas and the multiplication of micro-ATMs that work on Aadhar-enabled payments service (AePS), the biometric-driven payment system, is evidence of the fact that cash remains an important part of the rural economy in India. NPCI data states that AePS transactions stood at 105.65 million and 102.66 million in August and September. Average monthly AEPS transactions through micro ATMs have exhibited a stellar growth of 52% CAGR over the last 3 years.
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