Business

Fewer PoS Transactions May Cause Heavy Loss For SBI

News World India | 0
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| September 29 , 2017 , 15:11 IST

As demonetisation forced banks to invest in card-swipe machines, the country's largest lender State Bank of India (SBI), in its latest report has said that it stands in line for a whopping loss of Rs 3,800 crore annually.

The reason behind the loss is speculated to be the steep reduction in transaction charges on debit cards the bank rolled out, all while investing an all-time high amount into the point of sale terminals.

According to estimations, the average number of PoS transactions, with the new charges, cannot make enough for the bank's investment in the system.

Banks, which had a 15.1 lakh card swipe machine network in the country before demonetisation, had to boost the number of PoS machines to almost double 28.4 lakh, within a period of 7-8 months to meet the need of the time.

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The State Bank alone pushed the number from 3.4 lakh before demonetisation to 6.13 lakh as of July this year.

According to the SBI report, "In order to encourage card payments, the government has been pushing banks to install more number of point of sale machines and banks are installing on an average 5,000 PoS a day. But the transactions at PoS are increasing at a much slower pace."

In order for the banks to viably continue the PoS systems, the transactions would have to drastically increase, suggested the report.

If transactions do not gain momentum, this would raise the question of the viability of the business for acquiring banks, the report added.

The report said, "Though the government has proposed various measures to incentivise the PoS infrastructure and banks are installing PoS terminals, in the long-run the business would be viable only if the transactions at PoS surpass ATM transactions — an enviable task indeed."