UPI may soon become your ATM, users may use scanner to withdraw cash up to Rs…
If cleared, this move could change the way Indians access cash, making it as simple as scanning a code at a local store.
Unified Payments Interface (UPI), India’s most trusted digital payments system, may soon take on the role of an ATM. The National Payments Corporation of India (NPCI) has reportedly approached the Reserve Bank of India (RBI) seeking approval to enable QR code–based cash withdrawals via UPI at more than two million banking correspondent (BC) outlets across the country. If cleared, this move could change the way Indians access cash, making it as simple as scanning a code at a local store.
How UPI cash withdrawal will work
The process is designed to be as seamless as any regular UPI transaction. Users would open their preferred UPI app, scan the QR code provided by the banking correspondent, authorise the payment, and walk away with the cash. The system ensures that while the user’s account is debited instantly, the BC’s account is credited immediately, providing both sides with a secure and transparent transaction.
Currently, UPI withdrawals at merchant points are capped between ₹1,000 and ₹2,000 per transaction. If approved, the new framework could raise this ceiling to ₹10,000 per transaction, offering far greater flexibility.
Why this matters for India
Banking correspondents already play a critical role in bringing financial services to rural and semi-urban India. They are often the first point of access for citizens in areas without full-service bank branches. Many already provide Aadhaar-enabled services and micro-ATM withdrawals.
By integrating UPI into this network, NPCI could dramatically simplify access to cash, especially for people who face challenges with biometric authentication due to worn fingerprints or those who are wary of card-related frauds like skimming and cloning. With just a smartphone and a UPI app, withdrawing money could soon become as frictionless as paying for groceries.
The challenges and risks
Industry experts caution that this convenience may come with risks. The very simplicity of QR-based withdrawals could make it easier for fraudsters to exploit unsuspecting users. Some BC outlets have already been misused as conduits for cybercrime, where stolen funds are routed through multiple accounts to evade detection.
Another concern is the lack of standardised oversight. With no uniform operating procedure for fraud investigations, banking correspondents often face account freezes when flagged in cybercrime cases, threatening their livelihood. Unless these safeguards are addressed, scaling up UPI for cash withdrawals could strain the system.
