Coin Vending Machines

Reserve Bank of India’s new pilot project on coin vending machines.

RBI Governor had remarked during the recent Monetary Policy Committee (MPC) address that the apex financial regulator, in partnership with banks.
It would undertake a pilot project to evaluate the operation of a coin vending machine based on QR codes.

About
- A person will have to approach the bank branch to withdraw coins.
- The QR code-based coin vending machine (QCVM) is designed to dispense coins like currency notes that can be withdrawn from ATMs.
- Coins can be withdrawn from vending machines with the Unified Payments Interface (UPI) QR code.
- Coins in denominations ranging from Rs 1 to Rs 20 will be available in QCVM.
- Furthermore, the RBI intends to offer the product in 19 venues across 12 cities.
- Because the implementation would begin with a pilot launch, just a few banks may be involved in the early phases.

The main goal is to improve cash availability at the last mile across all categories, including the mass market.
Because the interface is UPI, linked to the person’s bank account, the value of coins withdrawn is directly debited from the bank account.
It eliminates the need to exchange notes for coins, saving time for bank branches and customers.
In addition, that will improve coin accessibility.
With cash sales still essential at tiny shops, QCVM could help vendors when coins are scarce.

Banks may incur additional fees for replenishing these vending machines through third-party agents.
A coin costs Rs 1.11 on average to mint.
From a financial standpoint, adding another layer for setting up and distributing currency through vending machines could be more appealing.
Because the government’s goal is to increase the popularity and reach of digital payments, QCVM may be detrimental.
QCVM appears to oppose e-Rupee retail’s goal.
- It is to lower currency minting/printing costs and gradually replace physical currencies with digital currencies.

About
- It is a more advanced form of Immediate Payment Service (IMPS), a 24-hour funds transfer service designed to make cashless payments faster, easier, and more seamless.
- UPI is a system that integrates;
  - Several bank accounts into a single mobile app (of any participating bank)
  - Combining several banking features
  - Smooth fund routing
  - Merchant payments are under one umbrella.
- UPI is now the most popular of the National Payments Corporation of India (NPCI)-managed systems, which also include;
  - The National Automated Clearing House (NACH)
  - Immediate Payment Service (IMPS)
  - Aadhaar-enabled Payment System (AePS)
  - Bharat Bill Payment System (BBPS)
  - RuPay and others.
- Today’s top UPI apps include PhonePe, Paytm, Google Pay, Amazon Pay and BHIM, the latter being the Government offering.
- As part of an arrangement, India’s UPI would be linked to Singapore’s PayNow.
- In 2016, NPCI launched UPI with 21 member banks.

About
- NPCI is an umbrella corporation operating retail payment settlement services in India.
- The RBI and the Indian Banks’ Association (IBA) founded NPCI under the Payment and Settlement Systems Act of 2007.
- In addition, it is to create a substantial Payment and Settlement Infrastructure in India.
- Under the Companies Act of 1956, NPCI was established as a non-profit organisation (Now the Companies Act of 2013).
Functions
- NPCI handles all retail payments in India.
- The RuPay card network, India’s domestic card network, is operated by NPCI.
- The Universal Payments Interface (UPI) is a real-time payment system that enables rapid payments between bank accounts.
- NPCI acts as National Automated Clearing House (NACH), an offline web-based system that handles bulk push and pulls transactions.
- NACH provides an electronic mandate platform for corporates and banks to register mandates, allowing paperless collection operations.
- It supports both account and Aadhaar-based transactions.
- Furthermore, NPCI manages the National Financial Switch (NFS).

Pic Courtesy: The Hindu

Content Source: The Hindu