QR Code-based Coin Vending Machines [QCVM]

The RBI announced that it would start a pilot project to launch QR code-based coin vending machines or QCVM in 12 cities. What are QR Code-based Coin Vending Machines? What would be their functions, benefits and associated concerns? Read on to know more about this topic, relevant for the UPSC exam economy segment.

QCVM Functions

The purpose of a QCVM is to dispense coins in a similar manner to an ATM.

• In the present scenario in order to obtain coins a person needs to visit a bank branch and offer currency notes in exchange for coins.
• But in the case of QCVM, coins can be withdrawn using a UPI QR code and the amount will be debited from the bank account of the person who withdraws.
• Vending machines will be installed in busy areas and public places such as markets, railway stations, and malls to ensure accessibility.
• The use of UPI QR codes also helps to bypass the feeding of fake currency to exchange coins.

What is the current mode of coin distribution?

• Coins are distributed at the Reserve Bank of India’s regional offices. 
• At present, to withdraw coins individuals have to visit bank branches. 
• But, if someone wants ₹5 coins for ₹3,000, they will have to visit their bank branch and tender the currency note in exchange for coins.
• QCVM will simplify this process.

Need for QCVM

• The QCVM will offer ready access to coins for consumers and is expected to boost the payment industry.
• Cash-based sales are still an important component of the retail market and the move is expected to benefit petty shops and vendors.
• QCVM will also aid in improving the availability of cash until the last mile and it will boost liquidity in areas where demand for cash is high.
• For the consumer, it saves time visiting bank branches and exchanging coins.
• Coins of denomination ₹1 –₹20 are widely used and they will be made available through QCVM.
• Consumers will have the option of withdrawing the amount in required denominations in QCVMs.
• The project will be further expanded based on inputs from the pilot project in 12 cities.
• The move is also expected to boost the transition from cash to digital payment by supplementing merchant acceptance points.

QR Code-based Coin Vending Machines Challenges

• The project of introducing QR code-based coin vending machines or QCVM might be counterproductive to the government’s efforts to promote digital payments through UPI.
• There are also additional costs involved in terms of minting coins and distribution of QCVM.
• Banks also incur costs as they need to replenish the QCVM in a similar manner to an ATM.
• QCVM also affects the objective of retail e-Rupee which aims to replace and reduce physical currency and the cost involved in printing and minting it.

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