RBI, on Friday, announced a new move that will encourage to move to safer methods to withdraw cash. This new method will not involve the usage of a credit or debit card. This is a multi-pronged approach by the central bank. Firstly, it will reduce the chances of card skimming as well as the convenience of making withdrawals using the smartphone. Also Read – India made over 7,422 crore digital transactions in FY22 alone

RBI Deputy Governor Rabi Sankar said in a statement, “We’re introducing card-less cash withdrawals to evade card skimming; the proposal is to begin authentication via UPI. It can be used for withdrawal from any bank’s ATM, third-party ATM, or White Label ATM. We’re working out its system changes & instructions.” Also Read – RBI to set audit guidelines for Paytm Payments Bank: Report

The use of credit and debit cards won’t change much despite the introduction of cashless withdrawal. Users will still be able to withdraw money using their cards. They will continue to be functional in restaurants, and shops for payments. Due to the lack of a UPI ecosystem abroad, debit cards and credit cards will be relevant in making payments outside the country. Also Read – Paytm Payments Bank moving data to other countries? Founder responds to allegations

RBI Governor Shaktikanta Das said, “We won’t stop issuing credit/debit cards, as they have many other utilities; they’re not just used for cash withdrawals, they can be utilized while at a restaurant, shop, or for payments in a foreign country. So credit & debit cards will be continued.”

Benefits of new Cardless Cash Withdrawl

Convenience: Cardless cash withdrawal will reduce dependence on carrying debit or credit cards. Al you will need is the smartphone with the registered mobile number and a UPI ID.

Safety: RBI has confirmed that card skimming risks will reduce with the implementation of this new plan. Users won’t have to worry about their ATM cards getting skimmed and cloned. Earlier, banks moved to chip-based ATM cards in order to provide safety from skimming.

How will the new method work

-To withdraw cash without a card, you will need a UPI ID, The transactions will be authenticated via UPI.

-Once you enter the ATM, you will have to choose the “Cashless Withdrawal” option on the screen.

-The ATM screen will then show a QR code that needs to be scanned within a UPI app.

-Then the user will enter the UPI pin and the cash will pop out of the ATM machine

Note: This method of cardless cash withdrawal is already available with a few banks like ICICI and SBI. However, it will be rolled out to other banks as well and it will function with third-party ATMs too.