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NPCI directs banks to provide cash withdrawals via UPI at select merchant outlets

Customers may soon be able to withdraw cash from merchants at some outlets using their UPI payments apps. In a March 16 circular, the National Payments Corporation of India (NPCI) — which owns and operates UPI — directed all member banks to enable cash withdrawal services at merchant locations starting June 1, 2020. Users can withdraw up to Rs 1,000/day in Tier 1 and Tier 2 cities, and up to Rs 2,000/day in Tier 3-6 cities. Customers can make 3 withdrawals per day on each UPI Virtual Payment Address (VPA). The fee structure for such cash withdrawals is: Interchange fee of 0.5% of the transaction value, capped at Rs 10, to be paid to the payee PSP by the remitter bank. Customer convenience fee of up to 1% of the transaction value, capped at Rs 10, to be paid to the payee PSP by the remitter bank. Switching fee to paid to the NPCI by the remitter bank PSP fee to be paid to the payer PSP by the remitter bank (For the customer withdrawing cash, the 1% fee is all they will pay. The merchant doesn't seem to be paid anything.) The payee can request for cash via their UPI app, such as Google Pay or PhonePe. The merchant will then provide the cash after receiving the cash withdrawal request on their PSP application. The Payee PSP has to ensure that the facility is available whether or not the customer makes a purchase with the merchant. Merchants have to clearly display…

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