New Guidelines Issued by NPCI for UPI – Based Cash Withdrawal at Kirana and Local Retailers

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Retail payment organization NPCI (National payments corporation of India) states new guidelines for UPI based cash withdrawal, which are exactly like the Cash-at-PoS model as permitted by RBI.


UPI based cash withdrawals through debit cards soon at merchant shops

UPI Cash Withdrawl

The Reserve bank of India had asked the banks to extend the facility of cash withdrawal through debit cards to be made available at the merchant shops. NPCI is setting out similar guidelines for UPI – based digital payment players offering the use-case to its customers.


Why is this implemented?

UPI cash withdraw

Recently Bengaluru based PhonePe has launched its “PhonePe ATM” service, which allows the user to locate all the nearby stores, where the users can go and make P2P transfers to shop owners and get physical cash in return.

Announcing the services in January, PhonePe said that this is entirely based on the rail of Person to Person payment transfers to shop owners and get physical cash in return.

NPCI is all set to extend the existing Cash-at-Point of sale (POS) model use case to its UPI platform.


How will the new guidelines help?

Controlling the Fraud: To control the misuse of the new facility, the per-transaction withdrawal limit is capped to Rs 2,000, where total withdrawals are capped to three transactions per day, which is permitted to each customer.

NPCI will allocate a separate Merchant Category Code to this transaction, MCC classifies a business by the types of goods or services it provides or accepts.

Third-party app providers are expected to add a specific transaction in the UPI-enabled application and push the separate MCC allocated by NPCI for transactions involving cash Withdrawal.


Interchange Fee to be charged!

The new regulation has an Interchange fee of 0.5 percent of the transaction value would be charged, which is currently capped to 5 Rs. Further, the service provider can decide to charge up to one percent of the transactional value, which would be capped to Rs 10.

The Interchange fee is the transaction fee that is made by the remitter’s or customer’s bank account to the beneficiary’s or merchant’s bank.

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