As India is moving closer to cashless economy after the government’s historic decision on November 8 to demonetize higher denomination currency, the recent announcement to exempt excise duty on Electronic Data Capture (EDC) machines, also known as Point of Sale (POS) machines, has made retailers scramble to install POS machines at their billing counters to accept plastic money.
Several public sector and private banks have decided not to levy transaction charges on card payments, which will further encourage small and medium retail business to go for digital payments through EDC.
POS machines are used for cashless transactions, both for making payments or as money vending machines to disburse cash in large retail businesses like Big Bazaar.
As POS devices are exempted from Central Excise Duty, these devices will also escape from Additional Duty of Customs (CVD and SAD). To encourage domestic POS manufacturers, all components required for making POS devices will not face excise duty, and also SAD and CVD. As per government notification, these devices can enjoy a tax exemption till March 31, 2017.
Understandably all dealers and manufacturers of POS are happy with the present opportunity. Bhaskar Venkatraman, Founder and Director of Millennium India, which deals with various POS devices such as POS terminals, Magnetic Card Readers, Receipt Printers, and Barcode Scanners, said: “Demonetization will take the country towards cashless economy in the near future. Already we have more than one million POS machines across the country installed by various banks. The recent development will push one million more POS devices across India in just another three to six months. People will have to use cards for all basic transactions which will further ease cash crunch.”
In real sense, POS devices are not just card swiping machines, but are intelligent devices that can do very many works such as billing, card payment, printing receipts and so on. In a typical super market setup, we call it as POS terminals or POS cash registers which have a combination of a POS terminal to do billing and manage other back store operations, card reader, receipt printer, cash drawer, barcode scanner, pole display and suitable POS software to run the operations seamlessly. The POS machines which banks are issuing will only help to accept money through credit/debit cards, explains Bhaskar.
Experts believe that there will be a spurt in imports of EDC machines and chances of intrusion of cheap machines from China can’t be ruled out. The demand will further reduce the prices of POS machines to around 15-20 per cent and going forward, small retail outlets and even roadside stalls will need card swiping machines.
Earlier, retail outlets and supermarkets, which were registered with banks and linked with respective current accounts, were only allowed to use POS machines. But with demonetization and subsequent government’s announcement to push plastic money, even normal stall-keepers who have a bank account can use EDC machine to stay in business.
Earlier, the EDC devices or credit/debit card swiping machines were made available by the Merchant Acquiring Teams of banks. And banks which give such machines are State Bank of India, ICICI Merchant Services, Axis and HDFC Bank. Now all banks are issuing such devices to their customers with the condition that they should have a current account with them.
Banks give machines to merchants and allow them to transact after linking the POS devices to their respective business accounts. Thanks to demonetization, good time ahead for sellers/dealers and manufacturers of POS/EDC machines in India.