NFS in India: Interoperable ATMs, UPI Withdrawals, and Security Features

The National Financial Switch (NFS) is the largest network of shared Automated Teller Machines (ATMs) in India, facilitating interoperable cash withdrawals, card-to-card funds transfers, and interoperable cash deposit transactions, among other value-added services. Managed by the National Payments Corporation of India (NPCI), NFS plays a pivotal role in India’s digital banking infrastructure.

Overview of NFS

• Established: August 27, 2004, by the Institute for Development and Research in Banking Technology (IDRBT).
• Transferred to NPCI: December 14, 2009, to enhance scalability and operational efficiency.
• Network Size: As of July 31, 2025, NFS comprises 1,361 members, including 118 direct members, 1,197 sub-members, 41 Regional Rural Banks (RRBs), and 5 White Label ATM Operators (WLAOs), connecting approximately 2.57 lakh ATMs across India.

How NFS Operates

NFS functions as a centralized payment switch, enabling seamless interbank ATM transactions. When a customer initiates a transaction at an ATM, the request is routed through the NFS to the respective bank for authorization. Upon approval, the transaction is processed, ensuring real-time and secure service delivery.

Key Features of NFS

• Interoperability: Allows customers to use ATMs of any participating bank, promoting convenience and accessibility.
• High Availability: Maintains an application and network uptime of above 99.50%, ensuring enhanced customer experience.
• Global Integration: Collaborates with international card schemes like Discover Financial Services (DFS), Japan Credit Bureau (JCB), and China UnionPay International (CUPI), enabling their cardholders to access ATMs connected to the NFS network.
• Security: Employs robust security measures, including encryption and authentication protocols, to safeguard transactions.
• Operational Efficiency: Utilizes the Bharat Clearing and Settlement System (BCS) for high operational efficiency and ease of online transaction lifecycle management.

Services Offered Through NFS

The National Financial Switch (NFS) enables a wide range of services through its ATM network. Here’s how these services have evolved over time:

1. Mobile Banking Registration (MBR)
   • Earlier: Cardholders could register for mobile banking using ATMs of any other participating member bank.
   • Current: Cardholders can now register directly with their own bank at an NFS ATM, provided their mobile number is already updated in the bank records.
2. Card-to-Card Fund Transfer (C2C)
   • Earlier: Fund transfers could only be initiated using ATMs of other participating member banks to send money to accounts of cardholders in those banks.
   • Current: Cardholders can transfer funds from their account to any other bank account through any NFS-connected ATM.
3. Cheque Book Request (CBR)
   • Earlier: Requests for cheque books could be placed only via ATMs of other participating member banks.
   • Current: Cardholders can now request a cheque book through any NFS-enabled ATM.
4. Statement Request (SR)
   • Earlier: Account statements could be requested only using ATMs of other participating member banks.
   • Current: Cardholders can request their account statement from any NFS ATM.
5. Aadhaar Number Seeding (ANS)
   • Earlier: Aadhaar seeding could be requested using ATMs of other participating member banks.
   • Current: Cardholders can link their Aadhaar number to their account through any NFS ATM.

Security Measures in NFS

Ensuring the security of transactions is paramount in the NFS framework:

• Encryption: All transaction data is encrypted to protect sensitive information.
• Authentication: Multi-factor authentication mechanisms are employed to verify the identity of users.
• Monitoring: Continuous monitoring of transactions helps in detecting and preventing fraudulent activities.
• Compliance: Adheres to regulatory standards and guidelines set by the Reserve Bank of India (RBI) and other authorities.

Participants in the NFS Ecosystem

The National Financial Switch (NFS) ecosystem comprises a variety of participants, ensuring seamless interoperability of ATM transactions across India:

1. Direct Members

• These are banks that route their ATM transactions through the centralized ATM switch.
• Requirements to be a direct member include:
  • Holding a valid banking license
  • Membership in RTGS (Real-Time Gross Settlement)
  • Maintaining a current account with the RBI
• Direct members are integral to the NFS network as they handle transaction routing and settlement.

2. Sub-Members

• Sub-members join the NFS network through a sponsor bank, which is a direct member.
• Transaction settlements for sub-members are processed in the books of their sponsor bank.

3. White Label ATM Operators (WLAOs)

• Authorized by the RBI under the Payment and Settlement Systems Act, 2007, WLAOs participate in the NFS network through a sponsor bank (or multiple sponsor banks).
• ATM transactions conducted at white-label ATMs are settled in the books of the designated sponsor bank(s).

4. Full KYC PPIs of Non-Bank Issuers

• Non-bank issuers with full KYC-compliant prepaid payment instruments (PPIs) can join the NFS network as sub-members under the sponsorship model.
• The RBI permits cash withdrawals from such PPIs within prescribed transaction limits, authentication requirements, and customer grievance mechanisms.

5. International Alliance Network

• The NFS network also supports ATM acquiring transactions of international networks, including:
  • Discover Financial Services
  • Japan Credit Bureau (JCB)
  • China UnionPay International
• Additionally, NFS enables Rupay cardholders from Bhutan’s Royal Monetary Authority to use NFS ATMs in India, and supports acceptance of Rupay cards at select ATMs in Nepal and Bhutan.

UPI-ATM Cash Withdrawal

The UPI-ATM service is an Interoperable Cardless Cash Withdrawal (ICCW) feature that allows customers of participating banks, who are active on UPI, to withdraw cash from any NFS-enabled ATM without using a physical debit card.

How It Works

• At the ATM, the customer selects the “UPI Cash Withdrawal” option.
• The customer enters the desired withdrawal amount.
• A single-use dynamic QR code is displayed on the ATM screen.
• The customer scans the QR code using any UPI-enabled app on their mobile.
• The transaction is authorized by entering the UPI PIN in the mobile app.
• Upon successful authorization, the ATM dispenses the cash.
  

Key Features

• Interoperable: Works across ATMs of multiple participating banks.
• Cardless Transactions: No need to carry a debit or ATM card.
• Transaction Limits: Up to ₹10,000 per transaction, within the existing daily UPI limit and issuer bank’s UPI-ATM limits.
• Convenience: Withdraw cash easily without carrying a card.
• Multiple Accounts: Customers can withdraw from multiple bank accounts linked to their UPI app.

UPI-ATM Interoperable Cash Deposit (UPI-ICD)

The UPI-ICD (Interoperable Cash Deposit) service allows customers of participating banks who are active on UPI to deposit cash at any UPI-ICD-enabled cash recycler or deposit machine without needing a physical card. Cash can be deposited into the customer’s own account or into any other bank account.

How It Works

• At the cash recycler or deposit machine (CDM), the customer selects the “UPI Cash Deposit” option.
• A dynamic QR code appears on the CDM screen.
• The customer scans the QR code using a UPI-enabled app and selects the beneficiary account for the deposit.
• The beneficiary’s name is displayed on the app for confirmation.
• The customer verifies the beneficiary and authorizes the transaction using the UPI PIN.
• The CDM prompts the customer to deposit cash into the machine. Once the cash is verified, the deposit is completed and the beneficiary’s account is credited via UPI.

Key Features

• Wider Reach: Supports deposits into both own and third-party accounts for added convenience.
• Interoperable: Works across multiple banks’ UPI-ICD-enabled machines.
• Cardless Transactions: No physical card is required.
• Transaction Limits: Deposits are allowed up to ₹50,000 per transaction, subject to the bank’s defined limits.

• Third-Party Deposits: Cash can be deposited into another person’s account using any of the following details: Beneficiary’s UPI-linked mobile number, Beneficiary’s Virtual Payment Address (VPA), Beneficiary’s account number and IFSC code