Cash withdrawal: Banks plan to add 10 lakh PoS devices by March-end

Such machines need to jump 10-fold from current 14 lakh for economy to grow.

Written by Sunny Verma | New Delhi | Updated: December 6, 2016 8:15 pm
demonetisation, cashless, cashless economy, india, india cashless economy, india news, india economy, india news, demonetisation news, PoS machines facilitate acceptance of payment from customers by swiping of their debit/credit/pre-paid cards on the PoS terminals.

To boost electronic transactions, the government is working to reduce acquisition price of point of sale (PoS) terminals while reducing transactions costs to make digital payments more attractive compared to cash. As per initial estimates by the finance ministry, the number of PoS machines across the country would need to jump almost 10-fold from the present 14 lakh devices to ensure that the economy grows even as physical stock of currency shrinks, officials said.

Banks are expected to add another 10 lakh PoS devices by March-end, industry sources said. “The number of PoS terminals is very low at present, as compared to the number of retail merchant establishments (1.5 crore) and small and medium enterprises (3.6 crore),” a senior finance ministry official said. Over 80 per cent of the transactions in Indian economy are conducted in cash, in contrast to developed countries average of around 20 per cent.

Watch What Else Is making News

“Some large banks have inventories of the PoS machines (which are mostly imported) and the government has asked them to provide these devices to entities wanting to install,” the official said. Since the government’s decision to abolish old Rs 500 and Rs 1,000 notes, state-owned as well as private sector banks have seen a sharp surge in demand for PoS terminals.

Banks including Axis Bank, State Bank of India, Corporation Bank among others have stepped up orders with leading global PoS terminal manufacturers, which include France-based Ingenico, US-based VeriFone, China-based PAX Technology, South Korea-based CyberNet. Country’s largest lender State Bank of India has seen ten times surge in demand for PoS machines.

“Last year, we (SBI) did about 1,00,000 machines in one year, that would translate into about 200 PoS machines per day, but now we have done many times 2,000 per day or 1,000 per day. So the people or the service providers who have been providing these PoS machines have been told to scale up their capabilities for faster rollout and target is that March-end, 1 million (10 lakh) more machines should be in place,” said Rajnish Kumar, managing director (National Banking Group), State Bank of India.

PoS machines facilitate acceptance of payment from customers by swiping of their debit/credit/pre-paid cards on the PoS terminals. They can also be used for disbursing cash. A PoS terminal may cost between Rs 5,000 to Rs 35,000 depending upon its features.

The number of PoS terminals in India grew from 5 lakh in 2010 to 14.62 lakh by August 2016, with five banks operating 11.94 lakh such devices, according to RBI data. State Bank of India has 3.29 lakh PoS machines, HDFC Bank 2.88 lakh, Axis Bank 2.71 lakh, ICICI Bank 2.02 lakh and Corporation Bank 1.02 lakh. But the number of PoS devices in the country is still significantly lower when compared with other emerging economies of China, Russia and Brazil. Some estimates indicate that to reach the average levels of BRIC countries, India will need 2 crore PoS terminals as against the current 12 lakh, RBI Deputy Governor R Gandhi had said last December.

In contrast to other emerging markets, India has only 2 PoS terminals per 1,000 debit cards, as per a study by Macquarie Research published in August, posted on the website of National Payments Corporation of India.

Brazil has 14.8 PoS terminals per 1,000 debit cards, while the ratio for China is 12.5 and Russia 6.1. Among developed countries, US had 13.1 PoS machines per 1,000 debit cards, Australia 33.2, France 21.4, UK 20.3 and Germany 7.2. A task force set up by the finance ministry to promote cashless transactions will suggest a framework to encourage business entities across sectors such as education, transport, groceries to adopt PoS devices to receive payments. The task force is headed by Anil Kumar Khachi, additional secretary in the department of financial services.

For all the latest Business News, download Indian Express App

    Live Cricket Scores & Results
    Express Adda