Spurred by demonetisation and 'digital India' initiatives, the number of PoS terminals in India nearly doubled in a year to three million pieces in November 2017 from 15.12 lakh pieces a year ago.
The period following demonetisation saw the sharpest growth with a month-on-month increase of 18-25% between January to April 2017, a TOI report said.
State Bank of India, which has the largest network, saw its share increase to 21% (6.3 lakh) as a result of its expansion drive and taking over of assets of its member banks. Last November, SBI had 3.59 lakh machines. Axis Bank, currently is the leading private player, with a 4.72 lakh strong PoS network, followed by HDFC Bank (4.10 lakh) and ICICI Bank (3.42 lakh).
Lower device cost and government incentives towards lower MDR costs are pushing PoS penetration in rural India, say machine manufacturers and retailers.
"Rural penetration has also been helped by mobile-PoS machines, which are 60-70% cheaper than traditional PoS devices. As more Indians adopt to smartphones and there is faster internet and better connectivity, you will see higher penetration of micro ATMs, PoS machines, m-PoS in India's rural hinterlands," said Pradeep Oomen, CEO, Bijlipay — a PoS solutions provider.
Indian Overseas Bank, which has increased its PoS network to 17,531 from 5,643 in a year, says another key reason for wider PoS networks is lowering of device costs.
"Earlier, the costs were as high as Rs 11,000 - Rs 12,000 per machine. This has nearly halved to Rs 6,500-Rs 7,000, acting as a spur," said R Subramaniakumar, CEO, Indian Overseas Bank. Newer Mobile-PoS machines are even cheaper and work out to about Rs 1,500 a piece.
Post-demonetisation as banks have hit the brakes on ATM expansion plans, they have accelerated their PoS expansion drive.
With ATMs costing as high as Rs 2-5 lakh, along with rental costs, security costs, banks find the returns from ATMs not justifying the costs. Lakshmi Vilas Bank, which has nearly tripled its PoS network to 6,891 from 2,846 in a year, says the focus is on expanding PoS.
"We have decided to go slow on our ATM expansion plans as we need to check the viability; our volumes would have to justify the cost," said Parthasarathi Mukherjee, CEO, Lakshmi Vilas Bank, which has about 981 ATMs in its network. The bank increased its branch on-site ATM strength to 393 from 335, but maintained offsite ATMs over one year at 590.
And transaction volumes also went up. November 2017 saw debit card usage at PoS terminals shoot up to 27.09 crore from 23.64 last year, while credit card usage was up to 11.57 crore from 9.79 crore earlier. PoS transactions in value terms also saw a rise with debit card transactions worth Rs 36,519 crore, up 12.5% and credit card transactions worth Rs 39,260 crore, up 47% earlier.