On Friday last week, this became the centre of an intense debate during the steering committee meeting of the National Payments Corporation of India (NPCI). The meeting saw banks and PhonePe’s rivals — including Paytm — raising questions on PhonePe being allowed to launch this service in the absence of any regulatory framework on cash withdrawal through UPI.
While cash withdrawal at point-of-sales (PoS) machines is allowed by the Reserve Bank of India (RBI), NPCI hasn’t yet formulated norms for this using the UPI platform. Sources said NPCI is now working on framing guidelines for the same.
The corporation also debated with banks if the service should be charged to consumers, which PhonePe is not in favour of as it feels a charge on cash withdrawal will “kill” the service. NPCI is considering following the model for cash withdrawal at a PoS device to issue its own circular for a similar service through UPI.
Another source aware of the goings-on added that PhonePe being allowed to launch the service in the absence of existing guidelines has been highlighted by its rivals to the regulator, putting NPCI under pressure. The ATM-like service, which clocked 1 lakh withdrawals over Friday and Saturday last week, is available with a million merchants in India. PhonePe has 10 million merchants in total.
Sources close to PhonePe added it is not considering stopping its ATM service, which was highlighted as “revolutionary” by Walmart’s international CEO and president Judith McKenna in Tuesday’s annual investor meeting in New York.
“It has to be dealt with carefully since some stakeholders can misuse the cash withdrawal without adequate checks and balances. Banks are pushing to levy a charge, which PhonePe is resisting. PhonePe’s UPI rivals are contesting that everyone should be given an equal opportunity when adequate guidelines are not in place,” a source said.
Another person aware of the talks said, “Now that NPCI is working on guidelines, anyone with existing products should ideally pause operations until a further update from the umbrella payments body comes.” According to current discussions, NPCI is of the view that a maximum of Rs 10 can be charged for each cash withdrawal via UPI with a daily limit of Rs 2,000 through three transactions.
Emailed queries to PhonePe and NPCI did not elicit any response. “We already have a Paytm ka ATM service that offers cash-in and cash-out facility from more than 67,000 locations in India for our customers,” Paytm said in a statement without commenting on PhonePe ATM.Paytm ka ATM was launched in December 2017 via its payments bank, enabled by banking correspondents, or BCs.
“If such models are allowed before NPCI frames rules, what happens to the jobs of BCs?,” one of the people mentioned earlier added. PhonePe ATM is part of the company’s aggressive marketing plan, which entails a budget of Rs 800 crore for 2020 with Bollywood actors Aamir Khan and Alia Bhatt as its brand ambassadors.