In a report, the State Bank of India (SBI) revealed that banks might lose Rs 3,800 crore (USD 580 million) annually due to the large investment in POSAbbreviation for “point of sale”. See Point-of-Sale terminal. More (Point of Sale) machines over the past months.
Since the demonetisationSee Demonetised banknote. More of 86% of the currencyThe money used in a particular country at a particular time, like dollar, yen, euro, etc., consisting of banknotes and coins, that does not require endorsement as a medium of exchange. More in circulation in November 2016, the government is actively promoting alternative paymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More methods, notably by encouraging banks to install more POS terminals. As result, the number of card-swipe machines almost doubled over the past months, to 2.8 million machines last July (compared to 1.5 last year). Nevertheless, the average number of transactions at POS remains low, equalling approximately 150 payments per month. Additionally, charges on debit cards have been significantly reduced in an effort to promote card payments. As a result, costs are surpassing revenues, while banks continue to install on average 5,000 POS terminals daily.
What’s more, losses are particularly remarkable when the card-issuing bank is different from the bank that installed the POS machine – known as “acquiring bank”. When the transaction is made with a credit card, the acquiring bank has to pay charges to the card-issuing institution, generating even more losses. According to the SBI, the amount of moneyFrom the Latin word moneta, nickname that was given by Romans to the goddess Juno because there was a minting workshop next to her temple. Money is any item that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular region, country or socio-economic context. Its onset dates back to the origins of humanity and its physical representation has taken on very varied forms until the appearance of metal coins. The banknote, a typical representati... More lost is so significant that it questions the future of acquiring banks. The report underlined that these investments will only be viable in the long-run if POS transactions surpass ATM withdrawals – a challenge that is still far from settled.
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