Some time back one of my acquaintances faced a peculiar situation. During late evening hours he went to a departmental store to make some purchases. He offered his debit card for making the bill payment. Even as the departmental store was having a point of sale (PoS) machine in place, his card was not accepted by the merchant establishment due to some disorder in the machine. Since he was not carrying much cash to make payment of the bill, he rushed to a nearby ATM. But unfortunately, the ATM didn’t respond. This left him confused, but not for too long. Someone near the ATM location guided him to a shopkeeper, who was offering cash against debit as well as credit cards.
Desperately needing cash to make payment at the departmental store, he rushed to the shopkeeper and hesitantly asked about the cash facility against cards. His joy had no bounds when the reply was given in affirmative, but at the same time he was a bit surprised over this kind of facility.
Cash against credit or debit card at a merchant establishment sounds incredible. But it is true. The mechanism is simple. My acquaintance was asked to swipe the card for the amount he needed against some purchases of goods. Actually the shopkeeper didn’t handover him the goods but handed over him the value of these goods in cash. But, against some charges linked to the value of goods.
This kind of situation is not new. There are instances where cardholders get cash while swiping their card at a PoS terminal installed at a merchant establishment. Instead of getting goods, the cardholder is given the value of goods in cash by the merchant establishment against some charges. So the PoS machines are acting as ATMs in such situations.
Here it is worth mentioning that the Reserve Bank of India (RBI) has already allowed cash withdrawal from point of sale (POS) terminals using a debit card, but not credit cards. That is, RBI has now allowed the card holders to withdraw cash from various merchants accepting a debit card. However, such withdrawals have been limited to Rs. 1,000 per day per debit card. In simpler terms, the debit card holder would be able to withdraw cash even if he does not make any purchase from the shop / merchant establishment.
Even as cash is perhaps still the most popular means of payment especially for small value consumer payments, the technological advancement has facilitated to create multiple channels for e-commerce, allowing financial transactions from anywhere and anytime in our state. During the past few years, we witnessed tremendous growth in the use of plastic cards, debit as well as credit cards, minimizing the use of paper currency in various financial transactions, more particularly the small value consumer transactions. The use of these cards has been now growing even in our rural belts.
The pace at which these cards are being used in day to day financial transactions, has led to incredible growth in Point of Sale (PoS) terminals at various merchant establishments across the country - be it a departmental store, medical shop, petrol pump or a restaurant. In fact, the efficient and productive use of the plastic cards, be it debit or credit cards, is directly dependent on the strong network of PoS machines.
Notably, in the first phase, banks successfully weaned customers away from branch transactions to automated teller machines, (ATMs). Later, the banks made their customers to migrate to the next stage of conducting cashless transactions at shops by swiping their debit cards, even their credit cards, at point-of sale (PoS) terminals. Now a stage is already in place where banks will be offering to convert plastic cards into real cash at PoS terminals.
Our merchant community should now prefer the PoS terminals, because documentation and back-end work is taken care of. Besides, the card usage also helps avoid the problem of counterfeit notes that some of them face. Migrating from cash to ATM is to save cost and time. But moving from ATM to PoS means more convenience for the customers as well as the merchants.
A scenario is in the offing here that when a customer will only prefer shopping at a merchant establishment having PoS terminal. To be precise, given the competitive financial environment of 21st century, merchant establishments here have to join the bandwagon and provide cashless transaction service and conversion of plastic money into real cash facility to the customers and that is possible only through a Point of Sale machine.

The views are of the author &
not the institution he works for.
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Lastupdate on : Fri, 16 Dec 2011 21:30:00 Makkah time
Lastupdate on : Fri, 16 Dec 2011 18:30:00 GMT
Lastupdate on : Sat, 17 Dec 2011 00:00:00 IST