Home / Business and Economy / Cash Surge Ahead? UPI Charges Spark ATM Fears
Cash Surge Ahead? UPI Charges Spark ATM Fears
23 Sep
Summary
- Banks asked to ensure ATM cash availability from October 15.
- New charges on select UPI transactions may increase cash usage.
- ATM networks have declined while digital payments expanded.
The Reserve Bank of India and the finance ministry have instructed banks to maintain sufficient cash in ATMs from October 15, 2026. This directive is a precautionary measure in anticipation of new charges affecting certain UPI transactions. A 0.4% Merchant Discount Rate (MDR) will apply to specific person-to-merchant (P2M) UPI transactions exceeding ₹2,000. This could lead to a temporary rise in cash usage as individuals and merchants adapt to the revised fee structure.
Experts suggest that these charges might disincentivize digital payments and encourage cash use in India's price-sensitive market. This concern is heightened by the fact that India's ATM network has been shrinking. Data from March 2025 indicates a decrease in the total number of ATMs nationwide compared to the previous year, with off-site machines showing the most significant decline. Banknotes in circulation, however, have seen a substantial increase, indicating a complex interplay between digital and physical currency trends.
Despite the potential for initial disruptions, former RBI officials and banking experts believe the preparations by the government and regulatory bodies are appropriate. These measures aim to maintain confidence in the country's currency and banking system, ensuring a smooth transition and preparedness for any unforeseen scenarios that may arise from the implementation of the new UPI transaction charges.
