UPI cash deposit feature at ATMs: Convenient, but here are 7 things you should be aware of

The Reserve Bank of India (RBI) has recently introduced an update that promises to make cash deposits at banks easier and more convenient through ATMs. This is one of an important step towards modernising banking procedures and improving accessibility for customers across the country.

Atish Shelar,  COO at TechFini says, “With the introduction of the new feature, you will get an option to deposit cash directly to your bank accounts using ATMs. This development comes as part of the RBI's ongoing efforts to promote digital transactions and simplify banking processes for the general public. By increasing the scope of the Unified Payments Interface (UPI), RBI aims to streamline cash deposits and reduce the dependence on traditional methods.”

While this innovation intends to bring convenience and effectiveness, it also raises some concerns and possible drawbacks that you must be aware of.

Limited accessibility:  The first and foremost drawback of the UPI cash deposit feature is its limited accessibility. “Not all ATMs may support this functionality initially, which could cause inconvenience to users who rely on cash deposits for various transactions,” says Shelar.

Technical hurdles: Whenever there is an introduction of any new technology, it often comes with technical challenges. You may encounter issues such as transaction failures, delays, or incorrect crediting of funds. These technical glitches could disrupt the functioning of transactions and can frustrate you.

Security risks: Besides technical glitches, the digital cash deposit feature can raise concerns about security risk. While RBI and banks go all-out to implement strong security measures, there is always a risk of cyber threats such as hacking or unauthorised access to users' UPI accounts, potentially leading to financial losses.

Transaction limits and charges: You may encounter transaction limits and charges associated with UPI cash deposits at ATMs. “The transaction limits can restrict the amount of cash one can deposit in a single transaction. Though additional charges might be incurred for using this service, it can affect its cost-effectiveness, especially for frequent depositors,” said Shelar.

User education and awareness: Many of us aren’t aware of UPI or may lack awareness of how to use it effectively. Without proper education and awareness campaigns, one might struggle to adopt this new feature, leading to underutilization or misuse.

Dependency on connectivity: You have to rely on internet connectivity for UPI transactions, including cash deposits at ATMs. Any locations with poor network coverage may face difficulties in successfully completing one’s transactions. Thus, reliable internet access is important for the seamless functioning of this feature.

Compatibility issues: It is very important to have compatibility between different banks' UPI systems and ATM networks. “Incompatibility issues could arise, especially during the initial rollout phase, may cause inconvenience and delays in transactions,” said Shelar.