AS the government cranks up to meet the cash crunch, several small businesses across urban and semi-urban areas are busy requesting their banks to set up card-swipe machines or point-of-sale machines (POS) so that they do not lose business to their more tech-savvy rivals.
The machines facilitate acceptance of payment from customers by swiping of their debit/credit/pre-paid cards on the POS terminals.
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An HDFC Bank official said there’s been a sharp rise in demand for POS. “While we used to receive 5,000 such requests in a month, over the last few days, this has gone up to 5,000 requests in a day,” said the official.
An Axis Bank official said the bank has recorded a three-time jump in demand for POS machines over the last few days.
While ICICI Bank did not specify the quantum of increase, its spokesperson said: “Over the past few days, we have witnessed a sharp increase in demand for our payment solutions at merchant outlets and for deployment of POS machines — significantly higher than its weekly average.” The spokesperson added that the bank has appointed additional manpower to handle this demand and to be able to deploy its solutions.
All these three banks said the requests are coming from new categories of merchants such as beauty salons, small kirana stores, even vegetable vendors.
This surge in demand builds on a trend. The number of POS machines has doubled from 7.41 lakh in September 2012 to 14.96 lakh in September 2016. Bankers say there has been a steady rise in installation of POS machines not only in big cities but even in Tier II cities across the country.
While the number of POS machines grew at 11.6 per cent between August 2013 and August 2014 from 9.81 lakh to 10.95 lakh, it grew by 8.8 per cent in the next 12 months to 11.9 lakh in August 2015. Reserve Bank of India data shows that between August 2015 and August 2016 the rise has been steep at 25.6 per cent.
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The RBI has capped merchant discount rate (charged to a merchant by banks for offering debit and credit card services) on debit card payment at 0.75 per cent of the transaction amount for value up to Rs 2,000 and one per cent for transaction amount for value above Rs 2,000. However, for RuPay cards issued by the National Payments Corporation of India, the MDR was set at 0.45 per cent for transactions up to Rs 2,000 and 0.65 per cent for transactions above Rs 2,000. In March this year, RBI proposed rationalisation of MDR on debit cards to encourage wider deployment of card acceptance infrastructure.
Bankers say that the surge in demand for POS machines is good news for the economy. Some say once an individual starts transacting through a card, it usually becomes a habit. Said a banker: “Earlier, a lot of merchants discouraged customers from using their cards. Now that they are installing them, it will significantly raise the quantum of e-transactions.” Card transactions also improve cash management and enable speedy payment.
POS machines are provided by banks through their branches. Any existing customer or non-customer may avail of the benefit. He or she needs to open a current account with the bank and must have a valid business establishment running for at least six months.