RBI in its Statement on Development and Regulatory Policies have announced a proposal to encourage card-less cash withdrawal facility across all banks and ATM network through the Unified Payment Interface (UPI). The proposal is another milestone in the development of financial transactions.
We're introducing card-less cash withdrawals to evade card skimming; the proposal is to begin authentication via UPI. It can be used for withdrawal from any bank's ATM, third-party ATM or White Label ATM. We're working out its system changes & instructions: RBI Dy Gov Rabi Sankar pic.twitter.com/mJ8g23DKFw
— ANI (@ANI) April 8, 2022
Cash-less to Card-less
However, Cardless cash withdrawal through ATMs is allowed by some of the banks in their own ATMs but the use of UPI for all banks and ATMs will be one step ahead, from cash-less to card-less.
Government after demonetization promoted cash-less transactions with alternate means of transaction that is through credit cards, debit cards, or UPI. Many were skeptical about the adoption of technology in a country like India. Where financial and technical illiteracy is found in even literate people. But the firmness of government not only strengthen the financial infrastructure but also brought a behavioral change in the adoption of technology. The banking system works on the trust and RBI and its subsidiary organization has been successful in winning the trust of the common people.
Read More: UPI has changed the way, how we Indians make payment
UPI – Pillar of financial stability
UPI has transformed the banking pattern of the country. The simplification of banking transactions has enabled a revolution in the Indian finance market. The real-time successful transaction has made a business-friendly environment in India. As lending and investment have come at the fingertip of people.
The growth of UPI has given birth to other business solutions like financial technology (fin-tech). The combination of software, mobile applications, and data analysis has made foundational changes in the finance sector. Now rather than going to the traditional loan provider for the loan at a higher rate you can get it through mobile apps at a competitive rate without any hidden costs.
The other revolutionary change brought through UPI is in the saving pattern of people. Saving money provides financial freedom and security. Now people do not need to keep cash in hand for any transaction. They can simply transact through UPI whenever they need to without any worry. This not only provides financial security but further help in the growth of the banking business ultimately leading to economic growth.
According to NPCI, in February 2022, 80% of the total transaction value was recorded from peer-to-peer payments. Moreover, 59% of the peer-to-peer payment was under Rs 500 value transaction. It shows the adoption of technology is at the lower strata of society.
Read More: GPay and AmazonPay control the lion’s share of the UPI economy and Indian players need to rise up
Financial technology development is going to be more convenient in near future. The business will be easier with one-click QR transactions. The future of financial transactions is going to be more seamless and user-friendly.
According to the growth in digital transactions, the security check on financial transactions also needs to be strengthened. The security of data has to be given the highest importance to check on online fraud. The RBI’s announcement to make the card-less transaction will help in checking on frauds like skimming, card cloning device tampering, etc.
Furthermore, with the greater adoption of digital transactions, the risk of financial fraud also increases. RBI needs to create a strong cyber resilience defense system to prevent any hacking.
