InvestorQ : In the latest monetary announcement, RBI announced cross ATM withdrawals. Will that reduce the importance of debit cards?
Mitali Bhutta made post

In the latest monetary announcement, RBI announced cross ATM withdrawals. Will that reduce the importance of debit cards?

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4 weeks ago
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In the monetary policy of April, the RBI announced permitted cross ATM withdrawal of cash without ATM / debit cards, just by using UPI authentication. The impact could be huge because currently card based ATM withdrawals are to the tune of Rs.2.65 trillion per month. The shift will make it safer to transact on the ATM as it will be an authentication with SMS password or authentication with special QR code generated. No skimming and phishing.

These are early days to judge impact, but India has shown rapid acceptance of new digital ideas like wallet, UPI transfers etc. If the UPI formula is applied to debit card withdrawal, then it vastly expand the applicability of UPI facility. More importantly, it reduces the need to carry card and run the risk like MDR charges, phantom charges at hotel, skimming of card details, slicing and duplication of card details, phishing etc.

Will the UPI based withdrawal substantially reduce the need for debit cards. It may not happen immediately. This is still dependent on mobile signals, which is work in progress. People are still more comfortable with traditional cards than with mobile friendly UPI facilities. There will be a resistance to a total shift. Also, the ATMs have to be enabled and that entails a cost, which most banks may not be willing to bear. It may still take time, but it is surely a good idea in the right direction.

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