What are QR code-based coin vending machines?
Announced as a part of the recently concluded RBI Monetary policy, QR code-based coin vending machine or QCVM is intended to dispense coins similar to the manner in which currency notes can be withdrawn from ATMs.
What is the current mode of coin distribution?
At present, a person will have to approach his/her bank branch to withdraw coins. They are also distributed at Reserve Bank of India’s regional offices. However, if someone wants ₹5 coins for ₹3,000, (s)he will have to walk into her/his bank branch and tender the currency note in exchange of coins. QCVM is intended to simplify the process. Coins can be withdrawn using the UPI QR code in designated vending machines.
Does it make it easier for users and banks?
Yes. Since the interface here is UPI which is linked to the bank account of the person, the value of coins withdrawn is directly debited from the bank account. Hence, it removes the requirement of tending notes in exchange of coins which saves time for the bank branches and the customer. However, banks will have to keep replenishing these vending machines similar to the manner in which ATMs are stocked. That could imply additional costs for banks since this is done through third part agents.
Will QCVM find takers?
For commoners, coins find use in public transport including autorickshaws, especially if you are a resident of Mumbai for instance. With cash sales still being an important component at petty shops and kirana stores, where coins tend to be in short supply, such vendors could also benefit from QCVM.
What denominations of coins are likely to be distributed through this mode?
Coins of denomination of ₹1 –₹20 are popularly in circulation now and these will be made available in QCVM.
Will all banks participate in this?
RBI plans to launch the product in 19 locations across 12 cities. Since the implementation would begin through a pilot launch, only select banks may be involved in the initial stages. For now, the launch date or the bank selected for this process hasn’t been revealed and we’ll have to wait for a detailed circular regarding these aspects.
When RBI is trying to promote digital and cashless payments, why distribute more coins in the economy?
The intention seems to be to enhance the last mile availability of cash across segments including the mass market. However, with UPI available on feature phones and the intent of the government remaining steady on increasing the popularity and reach of digital payments, QCVM could be counterproductive. The average cost of minting a coin is ₹1.11. If we add another layer for setting up and distributing coins through vending machines, the proposition appears unattractive from a cost perspective. Also, e-Rupee’s retail launched in December 2022 is intended to reduce the minting/printing cost of currency and gradually replace physical currencies with digital currencies. QCVM seems to be defying that purpose as well.