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Maybe this is what happens when the digerati rubber finally meets the regulatory road. However, I'm a bit sad that this should begin with someone like SQUARE, which never claimed to disintermediate banks from payments. 

Just as friction in online payments is driving shoppers to go back to cash & cheques in India, this Fed article explains how online identity theft is forcing people in the USA to go back to filing their tax returns the old-fashioned way, printing and mailing them. Looks like we're still far from striking the right balance between security and convenience for online transactions. 

Zipcar already uses e-locks opened by mobile apps on cars belonging to its fleet. Although it doesn't follow that people will adopt e-locks for their homes anytime soon, it does expose niches where mobile technologies could find acceptance sooner rather than later. For the record, plastic cards are too broadbased to belong to a niche.

"Stripe will face competition in Europe from Paymill". If Stripe doesn't need the website owner to have a merchant account, then isn't it just another "digital wallet"? In that case, won't it also face competition from the likes of PayPal and Skrill / MoneyBookers?

I'm not saying that ATMs are irreplaceable in a general context, just that cashback via small businesses is no substitute for ATMs. As for maximizing the bang for their ATM buck, banks have been doing that in India for over 10 years. I remember a time in the early 2000s when the ATM of my (German) bank in Frankfurt could dispense cash and do nothing else, not even display the updated account balance. Whereas, during the same era, the ATMs of one of the Top 3 private sector banks in India supported mobile topup and a few more advanced features (yes, they could also display updated account balance). 4-5 years ago, this bank started supporting P2P money transfer from its customers to non-account holders who could withdraw the money from its ATMs by keying in a PIN# - a feature that's just about making an entry in many countries during the last 1-2 years. Coincidentally, I just received an email from this bank today announcing instant FD opening, event ticketing and many more value-added features on its ATMs. I'm convinced that many banks in India are at the forefront of extracting maximum value from their ATM estate. Advising them to do so is preaching to the choir even if it does result in a lively discussion.

The business model for card acceptance - POS rental plus 2-4% MDF / MSC - is almost the same all over the world. For many years now, merchants have been receiving their payments from banks on T+1. Only when a cardholder raises a dispute that a merchant have to show the signed chargeslip as evidence of the transaction. Besides, SQUARE-clones that obviate the need for a POS for accepting card payments have been around in India for over a year now. If small businesses still hesitate to accept credit cards in India, it's either because they still find cash to be the cheapest mode of payment or their customers are indifferent to paying by card or cash or, like their brethren elsewhere in the world, they want to have their cake and eat it too as I'd pointed out here. I hardly hold banks responsible for this situation. Anyway, coming back to the main topic, if banks cut down their ATM count and tell me to go searching around for a small business to pick up cash, I definitely won't like it.

Having used the cashback facility several times in supermarkets in the UK and never found it in India, cash disbursement via businesses won't significantly impact ATM count, let alone disrupt cash management, for the following reasons: (1) It hasn't done so in the UK where it has been around for a long time, probably because average ATM cash withdrawals are much higher than the 25 GBP ceiling placed on cashback (2) Most small businesses in India don't accept cards, so the question of using them to disburse cash when paying by cards doesn't arise in the the first place - in fact, it's funny how many times I've been told by such businesses to visit the nearest ATM, withdraw cash, come back and pay them by cash because they don't accept cards (3) Surely, cashback can be implemented in supermarkets in India but organized retail to which supermarkets belong amounts to less than 10% of total retail volumes in India compared to >70% in the UK, so cash withdrawal via cashback would be a mere drop in the total cash withdrawal ocean handled by ATMs in India.

For thoughts that occured on a plane ride, they're not as 30,000 feet as one would've expected :) Kudos for outlining your basic idea on the "ground level". That said, I'm not so sure if the level of data consolidation you're proposing is achievable in the siloed world of today's banking. Besides, while working with banks, I've seen that the kind of deadlines that are attached to various compliance initiatives almost make it impossible to squeeze in any transformational measures alongside the execution of compliance programs. 

For reasons I'd highlighted in this Finextra post, shopping cart abandonment is surely a problem in India, UK and many other countries in the ROW that use 2FA for online payments. However, online checkout is highly frictionless on US ecommerce websites with none of them I've come across using 3DS and a couple not even asking for credit card CVV. I'm not sure if simplifying the checkout process any further will really improve "browser to buyer" conversion rate. We'll see...

That's US$ 3.25M per card. Since when did prepaid cards support this kind of stored value? Even before the crooks entered the scene, it seems like Bank Muscat's prepaid card program was compromised by extremely incomptent design that permitted such a thing to happen in the first place.