May 19, 2019 2:58:20 am
The Reserve Bank of India (RBI) is pushing for a 34 per cent increase in PoS (point of sale) terminals to 50 lakh in merchant establishments, mainly involving 44 per cent of total debit card transactions, in the next two years while aiming for “cash-lite economy” and digital modes for e-commerce.
“Given the current growth trend it is expected to have 50 lakh active PoS by end 2021,” the RBI said in a recent report.
Digital PoS (QR code) is also expected to increase substantially and the total card acceptance infrastructure will be upscaled to six times present levels by end 2021, the RBI said in its report on ‘Payment and settlements systems in India: vision 2019-2021’.
There are 37.22 lakh PoS terminals in the country as of now. The total value of PoS transactions through debit cards in the year ended March 2019 amounted to Rs 593,475 crore as against Rs 460,070 crore in the previous year, an increase of 29 per cent.
PoS transactions through debit cards were just Rs 329,907 crore in March 2017. PoS transactions using credit cards jumped to Rs 603,348 crore in March 2019 from Rs 327,878 crore in March 2017.
The RBI has proposed increase in use of digital modes of payment for purchase of goods and services through increase in debit card transactions at PoS (35 per cent increase during the vision period) and continued growth in PPI (prepaid payment instrument) transactions.
It said the usage of debit cards at PoS transactions is expected to be at least 44 per cent of total debit card transactions (at PoS and ATM). In value terms, it is 15.2 per cent in 2018-19 (5.2 per cent in 2014-15) which is expected to be 22 per cent by end 2021.
The central bank has proposed to step up deployment of card acceptance infrastructure across the country including smaller centres with a substantial portion of the infrastructure taking care of processing contactless card payments.
“This is expected to support aim of cash-lite economy and also shift Cash on Delivery (CoD) transactions to digital modes for e-commerce,” it said.
“While no specific target is considered for cash in circulation, the enhanced availability of PoS infrastructure is expected to reduced demand for cash and thus over time achieve reduction in Cash in Circulation (CIC) as a percentage of GDP,” it said.
It also envisages further facilitation of mobile based payment transactions as gauged on the basis of the registered customer base (expected increase of 50 per cent considering the base effect).
The central bank says enhanced usage of electronic payment systems is expected to reduce the marginal cost given the additional volume.
“The pricing of such services to customers should, over the vision period, show reduction of at least a 100 bps from current levels. Plus a shift from ad valorem rates to per transaction rates is envisaged, as usage of a system is irrespective of the value of a transaction,” it said.
The proposed push to increase PoS terminals has come at a time when the number of ATMs has come down from 222,247 in the previous year to 221,703 in March 2019.
However, the value of transactions executed through ATMs increased to Rs 33,10,789 crore from Rs 28,98,761 crore in the previous year. The RBI has proposed further decrease in the share of paper-based clearing as a percentage of retail payments, particularly in terms of number of paper instruments processed.
Given the current trend in cheque usage and the thrust to shift to digitised transactions it is expected that the volume of cheque-based payments would be less than 2.0 per cent of the retail electronic transactions by 2021, the RBI’s vision document says.
Payment systems like UPI / IMPS are likely to register average annualised growth of over 100 per cent and NEFT at 40 per cent over the vision period.
The number of digital transactions is expected to increase more than four times from 2069 crore in December 2018 to 8707 crore in December 2021.
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