Banking News

Point of Sale (POS) : Easy mode of payments and cash withdrawal


Latest update: Cash withdrawal at (Point of Sale) POS limit doubles for Tier III to VI centres

On a review of withdrawal through POS, it has been decided by RBI to enhance the cash withdrawal at POS from Rs.1000/- to Rs.2000/- per day in Tier III to VI centres with immediate effect. The cash withdrawal limit of Rs.1000/- per day through POS in Tier I & II centres remain unchanged. As per press note of Reserve Bank dated August 27, 2015, this facility will be available for debit cards and prepaid cards issued only by banks. It is expected that the above facility will not only add to customers’ convenience, it would aid recycling of cash at smaller centres.

The banking regulator advised that customer charges if any, levied on cash withdrawals shall not exceed 1 % of the transaction amount at all centres irrespective of the limit viz.Rs.1000/- or Rs.2000/-. The merchant establishments where the cash withdrawal facility is available (whether the card holder make a purchase or not) should clearly indicate/display the availability of the facility along with the charges if any payable by the cardholder. In case the cash is withdrawn along with the purchase of merchandise, the receipt generated shall separately indicate the amount of cash withdrawn.

Withdrawing the cash through designated POS is similar to withdrawal of cash at an ATM. The card holder must swipe their cards at the POS and provide PIN for authentication. Cash will be paid to card- holder after the process of due diligence.

 

Card payment acquiring business

The card payments are accepted by railways, airlines, malls, hotels, major shops and business establishments. For accepting payments through cards the merchant establishment, they need a Point of Sale (POS) terminal. The sale transactions made through POS terminal is called Point of Sale (POS) business.

The bank which is in ‘Card Payment Acquiring Business’   tie-up with network service providers like VISA International /Master cards, RuPay etc. The service provider who supplies Point of sale (POS) terminals at the identified merchant establishments across the country will take care of maintenance of POS supplied by it. A host computer is connected or communicated via network to several POS machines. The computer provides electronic data of card users’ account to POS devices. When purchase transactions takes place at the merchant establishment, the debit/credit card of the consumer is swiped or dipped in POS device that will automatically read the electronic data of the card. The crypto-processor inside the POS encodes magnetic stripe or chip of the debit/credit card and reads the details like customer’s name, account number, and other security features of the card and validates the card for operation. The new transaction made through POS will then reflect in card transactions of the customer.

Easy mode of payments

Nowadays major share of sale transactions is made only through  the point of sale (POS) business. All major banks have found that ‘Card Payment Acquiring Business’/ ‘Point of sale business’ is a new avenue to increase their fee-based profitability. The Bank which provided POS terminal at the merchant establishment gets  the commission from the merchants on the turnover made (credit card/debit cards swiped at the POS machines) which will be shared among POS machine provider like Visa/Master card and the bank which has issued the debit cards/credit cards. In addition to fee income, the bank which provides POS terminal will get free publicity through transaction report slip issued to the card user.

As the card payment is an easy mode of payment, nowadays major share of sale transactions are made only through the point of sale (POS) business. Therefore, the merchant establishment which accepts card payment gets more business opportunities. Even though the credit card holder makes the payment of his purchases at a later date (due date) the merchant is benefitted by the instant credit of card transactions to his account by the banks on next day.

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