Govt Allows Cash Withdrawal Via UPI: Find Out Charges, Cash Withdrawal Limit & More!

The National Payments Corporation of India (NCPI) has finally allowed cash withdrawal at merchant locations via Unified Payments Interface (UPI) platforms. Customers will soon be able to withdraw cash at certain merchant shops through the UPI apps.

In a circular, issued on March 16, the NCPI issued all member banks to enable cash withdrawal services at merchant locations using the UPI platform from June 1, 2020 onward.

Read to find out more…

Now You Can Withdraw Cash At Your Nearest Kiranawala!

The idea of allowing cash withdrawals at merchant outlets is not new but has failed to gather vigour in India. Earlier the Reserve Bank of India (RBI) was trying to encourage cash-out facilities through debit card transactions at point-of-sale machines. The Nandan Nilekani committee on digital payments had recommended in June last year that the RBI and NPCI, could create a framework and guidelines for cash-in and cash-out networks across the country.

The much awaited measure operational from 1st June, 2020 by the umbrella organisation will enhance the existing Cash-at-PoS model. 

According to NCPI data, Transactions on UPI have surged over the past two years. In February 2020, transactions on UPI surged to over Rs 2.25 lakh crore. These cash withdrawals at the outlets will not require PoS machines or debit cards.

NPCI circular states that  the third-party application providers and PSP applications should be responsible for conducting due-diligence on the merchant when on-boarding them for the service. It also highlights that the service should be added as a separate function on the application. This is aimed to ensure that a customer is informed of the type of transaction and the related charges.

The NCPI said that the payment service provider will also need to provide a customer grievance redressal mechanism to not only take care of general complaints but also issues related to fake currency.

How Will This New Cash-at-PoS Model Work?

The customer can request for cash via their UPI-enabled PSP platform, like Google Pay, PhonePe or Paytm. The merchant can provide cash after receiving the withdrawal request on their PSP application.

Before Getting Excited Look Into Some Terms and Conditions!

The circular added that UPI customers should be allowed to use this service at the merchant location irrespective of whether the customer makes a purchase or not. It asks that merchants prominently display the availability of the service along with the charges.

The cash withdrawal system will work in the Tier System. Under the service, a UPI customer can withdraw up to Rs 1,000 per day in Tier-1 and Tier-2 merchant outlets. A customer can withdraw up to Rs 2,000 per day if they are in Tier-3 to Tier-6 centres, through the UPI apps. To curb fraud per transaction withdrawal limit is limited to Rs 2,000. 

The fee structure as agreed by the members includes an interchange fee of 0.5 percent of the transaction value which will be restricted to Rs 5. 

Further, the service provider can decide to charge the customer up to one percent of the transaction value which will be limited to Rs 10.

Switching fee, paid by the issuer bank to the NPCI, of Rs 10 paisa for transactions below Rs 1,000 for P2P transactions. This fee will stand at Rs 50 paisa for P2P transactions above Rs 1,000.

P2P fee ranging between 10 to 50 paisa per P2P transaction, that is paid by the issuer bank to the payment service provider.