What is Virtual ATM and how does it work? Features, benefits - FAQs answered

Virtual ATM: Unified Payments Interface (UPI) is widely used now, so people often don’t carry cash when they go out. They can make payments online with just a phone and internet. However, many people don’t carry their debit or credit cards anymore because of UPI. This can be inconvenient when you need cash urgently, especially while traveling or in remote places.

According to ET, Paymart India, a Chandigarh-based fintech company, is changing cash withdrawals with its new Virtual ATM service. Amit Narang, the Founder & CEO of Paymart India Pvt Ltd, dubs this service the “Virtual ATM.” With Virtual ATMs, users can easily withdraw cash without the need for a physical card or visiting a traditional ATM.

How to withdraw cash using Virtual ATM?1. Smartphone and internet connection: Users require only a smartphone with internet connectivity to initiate a withdrawal.

2. Mobile banking application: Use your mobile banking app to request a withdrawal from your bank. Ensure your phone number is registered with the bank.

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3. OTP verification: Upon withdrawal request, your bank will generate a one-time password (OTP) and send it to your registered mobile number.

4. Visit nearby shop: Show the OTP to an affiliated shopkeeper listed in the mobile banking app to collect your cash.

This service makes cash withdrawal easy, without needing debit cards or traditional ATMs. Shopkeepers serve as virtual ATMs, making cash transactions convenient.

Who all can use Virtual ATMs?A Paymart release stated that the virtual ATM service has successfully completed a six-month pilot with IDBI Bank. The fintech firm has also collaborated with Indian Bank, Jammu & Kashmir Bank, and Karur Vysya Bank to introduce this service.

Currently, the virtual ATM service is available in select locations such as Chandigarh, Delhi, Hyderabad, Chennai, and Mumbai, as mentioned by Narang.

By March, Paymart intends to initiate pilot programs with its partner banks for a gradual nationwide launch, aiming to achieve this objective by April or May 2024. The company is also in advanced discussions with four additional banks for further collaboration.

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“The company has entered into a partnership with CSC e-Governance Services India Limited to further expand the reach of Paymart’s virtual ATM service, leveraging over five lakh locations nationwide to facilitate cash withdrawals,” the company states.

Benefits and limitations of Virtual ATM

• No charges: Users can avail of this service without any additional charges, at least for the time being.
• Withdrawal limits: Transactions can range from a minimum of Rs 100 to a maximum of Rs 2,000 per transaction, with a monthly limit of Rs 10,000.
• Small cash withdrawals: Virtual ATMs are useful for obtaining small amounts of cash. However, it may not be ideal for withdrawing large sums because the shopkeeper may not have sufficient cash on hand.

Virtual ATM benefits for banks

Paymart highlights how this new ATM service benefits banks:

• Cost reduction: Eliminates the need for installing and maintaining traditional ATMs, thereby reducing operational costs.
• Reduced footfall: Minimizes foot traffic in bank branches, particularly in remote areas.
• Revenue opportunities: Affiliated shopkeepers earn commissions on transactions, fostering business growth and customer engagement.

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