Soon RBI to allow withdrawing money using prepaid cards from PoS terminals

It is expected the Reserve Bank of India (RBI) will allow withdraw money from the point of sale (PoS) terminals using prepaid cards issued by banks.

A senior executive of a public sector bank said, “RBI is considering allowing open loop cards to withdraw money from a PoS terminal. RBI is working on issues, like the amount a PoS owner should charge. The decision may come soon.”

There are three types of prepaid cards. The prepaid cards issued by banks are generally open loop cards whereas the cards issued by non-banking finance companies (NBFCs) are semi-closed loop cards such as telecom companies issuing prepaid vouchers, and the gift vouchers issued by firms are close loop cards. However last year, RBI had brought close and semi-closed loop cards under the Payments and Settlement Act.

At present there are around 4.7 million PoS terminals in the country. Recently ICICI Bank has signed an agreement with First Data to set up PoS terminals.

A PoS terminal is mainly used to swipe card for payment of sale and purchase transaction, where as you can use ATM for several other services like balance enquiry.

In case of PoS the banks pays charges which are divided between card-issuing bank, the bank that owns the PoS terminal, the payment company, Mastercard or Visa, and the place where the PoS terminal is located.

Sachin Khandewal, senior general manager, ICICI Bank said, “We expect the growth to be around 50-70 per cent in the coming years. There is a huge potential in this industry, as it efficiently generates income for the issuers.”