RBI plans fund to push card swipe machines

MUMBAI: Concerned over low use of debit cards in electronic payments, the Reserve Bank of India wants banks that are not installing card accepting machines to contribute to a fund that will subsidise installation of point of sales (PoS) terminals. There are over 68-crore debit cards in India. Over a third of these have been added in the last two years following the implementation of the Jan-Dhan

Yojana. But the number of PoS terminals (credit card accepting machines) has gone up marginally from 12 lakh to 14 lakh. The average debit cardholder in India uses his/her card only once at a PoS machine for every 10 transactions in an ATM.

The proposal envisages creation of an 'acceptance development fund' which will subsidize installation of PoS machines with smaller merchants and in small towns and villages."Such funds have seen good results in other countries where they were created. In Indonesia, a similar fund was created a couple of years ago and had good results," said T R Ramachandran, Visa's group country manager for India and South Asia.

The RBI has come out in support of a fund rather than mandating installation of PoS terminals for banks as some lenders are not interested in the business. Today , five lenders dominate the merchant acquisition business -State Bank of India, HDFC Bank, ICICI Bank and Axis Bank.