Concerned over low use of debit cards in electronic payments, the Reserve Bank of India wants banks that are not installing card accepting machines to contribute to a fund that will subsidise installation of point of sales (PoS) terminals.
There are over 68-crore debit cards in India. Over a third of these have been added in the last two years following the implementation of the Jan-Dhan Yojana. But the number of PoS terminals (credit card accepting machines) has gone up marginally from 12 lakh to 14 lakh. The average debit cardholder in India uses his/her card only once at a PoS machine for every 10 transactions in an ATM.
The proposal envisages creation of an ‘Acceptance Development Fund’ through which the process of installation of PoS machines with smaller merchants will be subsidized in small towns and villages. It is revealed that such funds have seen good results in other countries where they were created. A report adds that in Indonesia, a similar fund was created a couple of years ago and had good results. RBI has come out in support of a fund rather than making PoS installation mandatory, for banks, as some lenders are not interested in the business. Today, leading lenders like State Bank of India, HDFC Bank, ICICI Bank and Axis Bank dominate the merchant acquisition business.