RBI allows cash withdrawals at POS terminal at stores

The Reserve Bank of India (RBI) has allowed cash withdrawals at point –of-sale- (POS) terminals which will make convenient for customers to use the debit card. In case the customer runs out of cash during shopping, need not have to search for an ATM he can get the debit card swiped at nearest retail shop, encash and carry. The facility can be availed by the 14.3 crore people who own debit cards issued in India.

On Wednesday RBI had issued a notification to all system providers like VISA, MasterCard and American Express and all scheduled commercial banks, which stated, “To start with, this facility will be available for all debit cards issued in India, up to Rs. 1,000 a day”.

In a day the customer can withdraw up to Rs 1,000 and to avail this facility customer don’t require do purchasing from that shop. For this withdrawal the customer has to pay a fee of 2-3%. If the cardholder does purchasing at the same shop then the cash withdrawn has to be separately mentioned on the receipt.

The swipe machines, or point-of-sale (POS) terminals, will be upgraded and it might take a month’s time for smooth service.

The banks might divide the service charge with retailers in order to lure them for offering this service. Currently the merchants are paying a fee of 1.5-2% for every card transaction.

With the introduction of this service the customers of small towns and rural areas having few ATM machines installed will be benefited. Hemant Kaul, executive director, Axis Bank pointed out, “In a small town, where ATMs are few and far between, the ability to withdraw cash from a nearby PoS would be a matter of great convenience. This will also encourage the use of debit cards at PoS-enabled merchant establishments”.

A retailer is required to deposit a certain amount of money in a bank everyday but er this move will reduce the amount of money as the retailer can use it for a fee. On the other hand increase in the debit card usage will transform into higher fee income. Presently for every ATM 10 swipe machines are available in the country.

RBI sources said the facility will be available at the merchant establishment which has been selected by the bank after due meticulousness.

According to the data available around 2-3% PSU bank customers make payments with their debit cards while most of the customers use their debit cards for withdrawal of money from ATMs. Around 14-19% private and foreign banks customers do the same.

The RBI said it is up to the boards of banks to decide whom to offer this service after checking the product profile, risk perception and risk mitigation measures.

When the boards have given the final approval, banks will have to take a one-time approval from RBI.