UPI Surge Outpaces ATMs as Banks Cut Cash Access Points Despite High Demand

Despite a surge in cash flow across India, banks are increasingly shutting down ATMs and cash recyclers, reflecting a broader transition to digital payments, particularly via the Unified Payments Interface (UPI). 

According to the latest Reserve Bank of India (RBI) data, ATM numbers have declined from 219,000 in September 2023 to 215,000 in September 2024, with off-site ATMs experiencing the steepest drop, plummeting from 97,072 to 87,638.

This shift aligns with India’s push for digital transformation in banking. Although cash transactions accounted for 89% of all financial activities in FY22 and contributed 12% to the GDP, ATM penetration remains limited, with just 15 ATMs available per 100,000 people. 

Regulatory policies have also impacted the ATM landscape; RBI’s guidelines on free transactions, interchange fees, and interoperability discourage banks from further ATM investments. 

These factors, coupled with increasing digital adoption, underscore the rapid changes in India’s payment ecosystem, where physical cash access is being reduced in favour of digital convenience.

Also Read: Indian Life Insurers Achieve Record Growth in October 2024: Premium Collection Surges 18.56% YTD

Why people are using UPI over ATMs?

In comparing ATMs to UPI, the convenience and accessibility of UPI transactions continue to attract users across demographics, even in rural areas, where cash traditionally dominates. UPI allows users to transfer funds instantly without any physical infrastructure, contrasting with the limited reach and access of ATMs. The decline of ATMs amidst high cash demand reflects the ongoing transformation of India’s payment ecosystem, as the UPI network continues to expand rapidly, reshaping the nation’s approach to banking and financial transactions.

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