NPCI allows customers to withdraw cash at merchant stores via UPI platform

Customers can now withdraw cash at specific merchant outlets using the United Payment Interface (UPI) platform from June 1. 

A circular, issued on March 16 by the National Payments Corporation of India (NPCI), allows users in tier-1 and tier-2 cities to withdraw upto Rs 1,000 a day across three transactions. For tier-3 to tier-6 cities, the limit is Rs 2,000. 

The announcement follows the NPCI guidelines formulated in February, which made similar suggestions. 

In August last year, the Reserve Bank of India (RBI) had directed banks to enable cash withdrawals at points of sale (PoS) for customers using debit cards and open-loop prepaid cards, with similar limits on withdrawals. The current announcement also follows the central bank’s vision to create a large-scale PoS infrastructure to boost digital transactions in the country. 

The circular allows the payment service provider (PSP) to charge 0.5% of the transaction value as an interchange fee, which will be capped at Rs 5. This comes at a time when the payments industry is looking at ways to increase revenue after the zero merchant discount rate (MDR) move was announced in the 2019 union budget.

The NPCI also sets down clauses to ensure price transparency and fraud prevention. It said the facility must be available to customers, irrespective of whether they make a purchase at the merchant stores or not. The total amount to be paid by the customer, including charges such as convenience fee and interchange fee, must be specified before the transaction is completed to prevent fraud, the circular added.

The circular said that third-party UPI apps, such as Google Pay, Amazon Pay and PhonePe, must create a “separate enablement”, or a seperate section or tab, on their apps for cash withdrawal purposes. The apps must also convey to the customers, via push notifications, that the platform was used to make a cash withdrawal.