The ongoing COVID-19 pandemic is fueling digital drive, forcing people to embrace the technology driven solutions to conduct financial transactions. Among other digital channels of conducting financial transactions, it’s the use of point of sale (PoS) terminals which is picking up fast. The number of point of sale (POS) machines as on January 2020 was almost 5 million.
Precisely,the pandemic induced situation is triggering a shift in financial transactions,especially small transactions, where people are seen preferring not to drawcash from the ATM for spending, but directly do purchasing by swiping theirdebit as well as credit cards on the PoS machines at merchant establishments.
Now, to popularize the use of PoS machines the Reserve Bank of India (RBI) last week restated the information about the facility of cash withdrawals from point of sale (PoS) terminals. Actually, the facility of cash withdrawal at a PoS terminal was introduced by the RBI in 2009. But it didn’t pick.
Theregulator has since the launch of the facility repeatedly tweaked rules,regulations and limits around the facility. In August 2015, the RBI had raisedthe withdrawal limit to Rs 2000 for Tier 3 and 4 centres on PoS withdrawals. InNovember 2016 amidst demonetization, RBI had raised the withdrawal limitsuniformly for all centers to Rs 2000 and also waived off customer chargestemporarily.
In June2019, the regulator also chided banks for not implementing the facility, notingthat the cash withdrawal facility at PoS terminals was not implemented inletter and spirit” RBI in a letter to bank heads once again re-iterated PoSwithdrawal facilities and directed the banks to extend the facility at anymerchant establishment designated by them.
Remarkably,the use of PoS channel to conduct digital transactions in the ongoingCOVID-19 crisis is proving the mostconvenient mode of making payments against purchases at merchantestablishments. Now pushing PoS machines as mini ATMs will be fascinating as itwill add more convenience to the customers and also create revenue stream forthe merchants.
What is a PoS terminal?
Apoint-of-sale (POS) terminal is an electronic cash register which can processcredit and debit cards. A customer needs to enter a card PIN to complete thetransaction using the PoS terminal.
How merchants can install a PoS machine at their merchant
A merchanthas to request the bank where he has an account to install PoS machines at hisestablishment.
What are the charges?
Theend-customer does not have to pay any charges for swiping his or herdebit/credit cards at the PoS terminals. However, the merchant has to pay theissuer bank what is known as merchant discount rate (MDR). The issuer bank isthe one which installs the machines at the merchant establishment.
Which types of cards are allowed for withdrawing cash at PoS terminals?
Under thefacility of cash withdrawal at PoS terminals, cardholders can withdraw cashusing their debit cards and open system prepaid cards issued by banks in India.However, credit cards cannot be used under this facility. Cash can also bewithdrawn at PoS terminals through Unified Payments Interface (UPI) as well asthrough use of electronic cards that are linked with overdraft facilityprovided along with Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts.
What is the limit of cash that can be withdrawn under this facility?
A cardholdercan withdraw cash up to Rs.2,000/- per day per card in Tier III to VI centres.At Tier I and II centres, the withdrawal limit is Rs.1,000/- per day per card.
What are the charges for availing this facility?
Charges, ifany, levied on cash withdrawals shall not exceed 1% of the transaction amount.
Is cash withdrawal facility available at all merchant establishments? How will a cardholder know if the facility is available at a particular merchant establishment ?
The facilityis not available at all merchant establishments. The bank that deploys the PoSterminal (acquirer bank) designates merchant establishments for rendering suchfacility to the customers. The banks have their own processes of observing duediligence while selecting a merchant establishment for extending cashwithdrawal facility at the PoS terminal. The designated merchant establishmentshave to clearly indicate / display the availability of this facility along withthe charges, if any, payable by the customer.
Herecustomers have to note that they don’t have to pay any extra charges for usingtheir credit/debit cards for making purchases at a merchant establishments, beit shops, hotels, restaurants, petrol pumps etc.
Can cash withdrawal be made on PoS terminals deployed by other banks (i.e. banks other than the card issuer)?
Yes. acardholder can withdraw the cash from PoS terminal(s) at designated merchantestablishment(s), irrespective of the fact whether the card issuer and theacquiring bank are same or not.
Is it necessary to purchase some goods / service from the merchant establishment for availing this facility?
The facilityis available irrespective of whether the card holder makes a purchase or not.
(Inputs from the Reserve Bank of India website www.rbi.org.in)