POS machines see manifold jump, but ATM installation slows down

POST DEMONETISATION

FOLLOWING THE government’s push and reduction in both transaction cost and acquisition price of point of sale (POS) terminals, banks have added more than 10 lakh POS machines in the five-month period between November 2016 and March 2017. On the contrary, as the cash availability reduced after demonetisation was announced on November 8, banks significantly slowed down the pace of ATM installations. While banks added 20,478 ATMS in the period between April and October 2016, the next five months saw the addition of only 2,897 ATMS.

The number of POS machines at the end of March 2016 stood at 13.82 lakh and rose to 15.12 lakh at the end of October 2016. However, the RBI data shows that in the next five months (during and post-demonetisation period), banks added 10.16 lakh POS machines taking the aggregate number to 25.28 lakh.

The sharp rise in the addition of new POS terminals following demonetisation also led to a jump in transactions in value terms, and it jumped from Rs 3,97,040 crore in 2015-16 to Rs 6,57,785 crore in 2016-17. This rise in installation of POS machines is in line with the government’s push to move towards cashless transactions. In December, the finance ministry directed banks to install an additional 10 lakh new POS terminals across country by March 31, 2017.

A statement issued by the finance ministry on December 6, 2016 said that while banks have already placed orders for 6 lakh POS machines, another 4 lakh are likely to be ordered in the next few days. “As part of the plan to expand the digital payments ecosystem and facilitate the move towards cashless transactions, the government has decided that an additional one million new POS terminals should be installed by 31 March ,” it said.

As digital transactions jumped post note ban, the mobile wallet transactions during the year witnessed a sharp rise in 2016-17, especially between November 2016 and March 2017. From 255 million m-wallet transaction in 2014-15 and 604 million transactions in 2015-16, the number of m-wallet transactions jumped by 169 per cent in 2016-17 and stood at 1,630 million transactions. More than 70 per cent of the 1,630 million transactions in 2016-17 got executed between November 2016 and March 2017.

In line with the addition of new POS terminals, there has also been a jump in the issuance of new debit and credit cards during the year. While the number of credit card outstanding for the year rose by 21.8 per cent to 29.8 million cards, the number of debit cards jumped 29 per cent during the year to 854.9 million.

As cash availability became a big issue during the demonetisation period and individuals relied heavily on digital transactions, both private and public sector banks saw a huge rise in demand for POS terminals from merchants. As a result, banks stepped up orders with leading global POS terminal manufacturers — France-based Ingenico, Usbased Verifone, China-based PAX Technology and South Korea-based Cybernet.

POS machines facilitate acceptance of payment from customers by swiping of their debit/credit/pre-paid cards on the POS terminals. They can also be used for disbursing cash.