Contactless payments are set to get another boost with the Reserve Bank of India’s (RBI) plan to enable cardless cash withdrawals at ATMs. While the facility had gained some traction during the pandemic, players believe that it will now see more usage and adoption, especially from the younger population and in rural areas.

“It’s another channel or platform for customers to access cash. In the new approach, cash is still withdrawn from ATM machines; the change is — instead of physical debit cards, customers can use UPI-based QR code to withdraw cash,” Ashish Ahuja, Chief Operating Officer, Fino Payments Bank, said, adding that it will further simplify banking.

“This form of cash withdrawal will inherently appeal to the newer generation that is digitally savvy and experiments with newer initiatives. Their usage and acceptance will play a key role in making UPI-based QR code cash withdrawals more widespread,” he added.

Rustom Irani, MD and CEO, Hitachi Payment Services, said such withdrawals would also help the rural population, as many of them do not have or use debit cards. “This will help further financial inclusion. At Hitachi Payment Services, we plan on providing the facility at our white label ATMs shortly,” he said.

QR code scanning

The RBI has said the facility will be based on UPI and the details are expected to be announced shortly. According to industry players, this will be based on QR code scanning. “We believe QR codes are the future of banking and payments industry for their inherent ease of use and facilitating secure cashless transactions,” Ahuja said.

A report by SBI Ecowrap said it also expects it to operate as a QR code scanning at ATM through UPI to withdraw cash from any ATM. “Additionally, introducing a dual layered, SMS and password enabled withdrawal facility, on the line of SBI’s YONO cash could work wonders for the diverse customers segments,” it added.

Banks offer service

SBI was the first bank to launch the facility way back in 2019, wherein customers could withdraw money through the YONO app. It gained popularity during the pandemic and a handful of more banks offer the service, such as HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, RBL Banks and Bank of Baroda. But most players use different technology.

“Touchless and contactless means of payments have gained a lot of traction since the pandemic. A cardless cash withdrawal system also enables people to not worry about the safety and security of their debit cards. People don’t want to touch anything as far as possible and this will take care of that concern,” noted a banker.

Depending on the bank, amounts between ₹10,000 to 20,000 per day can be withdrawn using the service. Customers usually have the option to withdraw funds at the bank’s ATM or at specific stores.

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