Fino Payments Bank Launches Cash@UPI to Revolutionize Last-Mile Cash Access in India

Fino Payments Bank has launched Cash@UPI, a merchant-led withdrawal service that removes the need for physical cards or biometric hardware. By integrating with the National Payments Corporation of India (NPCI) ecosystem, the move addresses the persistent demand for physical currency in rural markets while leveraging the massive scale of India’s digital payments infrastructure.

What was announced

Fino Payments Bank has introduced Cash@UPI, an assisted banking solution designed to facilitate cash withdrawals through its vast merchant network. Unlike the existing Aadhaar-enabled Payment System (AePS) or traditional Micro-ATM services, this new solution does not require biometric authentication devices or specialized hardware. Instead, customers can withdraw cash at participating merchant outlets using their existing UPI applications, making the process entirely digital on the consumer side while resulting in a physical cash payout.

The service is specifically targeted at "Bharat"—the rural and semi-urban segments of India where smartphone penetration is rising but cash remains a primary medium for local transactions. The bank currently operates through more than 20 lakh merchant touchpoints, covering approximately 98% of India's PIN codes. This infrastructure is significant given the bank's recent performance metrics; in the first quarter of FY’27, Fino processed 94.7 crore transactions with a total value of ₹1.11 lakh crore. Furthermore, during FY26, the bank facilitated ₹31,800 crore worth of transactions through its existing Micro ATM and AePS channels. This new UPI-based offering is intended to complement those existing services, providing a hardware-free alternative for merchants and a more familiar interface for digitally savvy customers. The launch follows a major regulatory milestone for the institution, as it received ‘In-principle’ approval from the Reserve Bank of India (RBI) to convert into a Small Finance Bank on 5th December 2025.

"As digital adoption increasing across India, we at Fino aim to engage with digitally savvy customers through Cash@UPI solution, an offering that makes banking more accessible, convenient, and inclusive. In FY26, we facilitated Micro ATM and AePS transactions worth Rs 31,800 crore. Cash@UPI is expected to enhance this pie as the Bank taps the emerging smartphone using and UPI-active customers from Bharat. The solution further strengthens our phygital banking proposition and reinforces our commitment to financial inclusion at scale as we prepare for our next phase of growth."

Tejas Maniar, Chief Digital & Liabilities Officer at Fino Payments Bank.

The companies involved

Fino Payments Bank Ltd is a technology-driven, asset-light digital bank that focuses on the unbanked and under-banked populations of India. It operates as a subsidiary of Fino Paytech Ltd and has established itself as a high-volume, low-cost player in the financial inclusion space. The bank is supported by a group of high-profile investors, including the ICICI Group, Bharat Petroleum Corporation Limited (BPCL), Blackstone, Life Insurance Corporation of India (LIC), and the International Finance Corporation (IFC). Notably, Fino is the first Payments Bank in India to receive approval to transition into a Small Finance Bank, a move that will allow it to expand its lending capabilities and product suite.

The National Payments Corporation of India (NPCI) serves as the technical backbone for this initiative. As the specialized division of the Reserve Bank of India and the Indian Banks' Association, NPCI manages the retail payments and settlement systems in the country. Its Unified Payments Interface (UPI) has become the dominant digital payment method in India, and the organization continues to iterate on the platform to support diverse use cases, from merchant payments to cross-border remittances and now, assisted cash withdrawals.

What FF News has reported before

The National Payments Corporation of India has been consistently expanding the utility of the UPI framework beyond domestic peer-to-peer transfers. FF News previously highlighted the organization’s efforts to globalize the standard in J.P. Morgan Payments and NPCI Launch Real-Time FX for Cross-Border UPI Transactions. That development showcased NPCI's ability to integrate complex foreign exchange and real-time settlement capabilities into the UPI ecosystem. While that report focused on international corridors, the current launch of Cash@UPI demonstrates a parallel strategy of deepening domestic penetration by solving the "last mile" problem of cash accessibility through the same underlying technology.

What this means

The shift from hardware-dependent cash withdrawals to a software-based UPI model represents a significant evolution in the "phygital" banking landscape. By removing the requirement for biometric scanners, the barrier to entry for new merchants to act as "human ATMs" is effectively eliminated. This places immediate pressure on traditional ATM manufacturers and specialized Micro-ATM hardware providers, as their value proposition shifts from essential infrastructure to a legacy alternative. The industry must now grapple with the reality that cash distribution is becoming a commoditized software feature rather than a hardware-locked service. For the wider fintech sector, this move signals that even in a "digital-first" economy, the ability to bridge the gap back to physical currency remains a critical competitive advantage in emerging markets.