Interoperable cardless cash withdrawal

Interoperable cardless cash withdrawal

Subject: Economy

Section: Monetary Policy

The Reserve Bank of India has said all banks, ATM networks and white label ATM operators may provide the option of interoperable cardless cash withdrawal at their ATMs.

Details:

• National Payments Corporation of India has been advised to facilitate Unified Payments Interface (UPI) integration with all banks and ATM networks.
• While UPI would be used for customer authorisation in such transactions, settlement would be through the National Financial Switch (NFS) or ATM networks.
• At present, the facility of card-less cash withdrawal through ATMs is limited only to a few banks.

Interoperable cardless cash withdrawal from ATM:

In the new approach, cash is still withdrawn from ATM machines; the change is — instead of physical debit cards, customers can use UPI-based QR code to withdraw cash. It involves QR code scanning at an ATM through UPI to withdraw cash from any ATM.

Types of ATMs:

• White Label ATM – When ATMs are owned and operated by non-bank entities but they are not doing ‘outsourcing-contract’ from a particular bank.
• Brown Label ATM – When banks outsourced the ATM operations to a third party.

• Green Label ATM – ATM is provided for Agricultural Transaction.
• Orange Label ATM – Provided for Share Transactions.
• Yellow Label ATM – Set up for the purpose of E-commerce.
• PINK label ATM – Such ATMs are monitored by guards who ensure that only women access these ATMs. The sole purpose of such ATMs is to mitigate the problem of women standing in long queues of ATMs.
• Biometric ATM – ATMs which use security features like fingerprint scanner and eye scanner of the customer to access the bank details.

The National Financial Switch is the largest interconnected network of automated teller machines (ATMs) in India. This system was developed by Institute of Development and Research in Banking Technology (IDRBT), Hyderabad.

National Financial Switch (NFS) ATM network having 37 members and connecting about 50,000 ATMs was taken over by NPCI from Institute for Development and Research in Banking Technology (IDRBT) on December 14, 2009. 

Salient Features

• NFS has introduced a sub-membership model which enables smaller, regional banks including RRBs and local co-operative banks to participate in the ATM network.
• NFS has maintained high standards of application and network uptime of above 99.50% which has helped our member banks ensure enhanced customer experience.
• The Dispute Management System (DMS), has benefitted members with high operational efficiency and ease of online transaction life cycle management (chargeback, representation, etc.) in the network apart from being compliant with local regulatory requirements.
• NPCI has also tied up with International card schemes like Discover Financial Service (DFS), Japan Credit Bureau (JCB) and China UnionPay International (CUPI) which allows their cardholders to use ATMs connected to the NFS network.
• The Fraud Risk Management (FRM) solution is offered as a value added service to monitor transactions (in real time) and to generate alerts or decline the transaction in the NFS network.