The government’s Digital India campaign seems to be a big setback. In fact, in a report of State Bank of India, the changes made after banknotes in bank’s payment system are expected to cause a loss of Rs 3,800 crore annually. Banks already struggling with capital deficit can be a bigger problem.
Banks installed more than 5,000 PoS machines per day
After the ban on last year, the Modi government has imposed millions of points of sale (PoS) machines to promote online payment. Since then, the banks have exceeded their PoS terminals more than double. Talking about PoS machines purchased to promote cashless system after the ban, it was 13.8 lakh in March last year and till July this year, the number has increased to 28.4 lakh. Banks have installed 5,000 PoS machines per day on an average.
Heavy losses to banks
According to the report, even though debit and credit card transactions have increased, banks have suffered huge loss due to reasons like low MDR, low card usage, poor telecom infrastructure. It has been reported in the report that through PSS these machines, a transaction of 50,000 crores was made in October 2016. Which has increased to Rs 70,000 crore till July 2017. By December 2016, the figure was expected to reach Rs 89,200 crore. Banks have suffered losses in this regard.
Loss of Rs 5,000 crores on POS terminals
The report said, “The government has taken several steps to promote PoS Infrastructure and the banks have also installed maximum POS machines. But in the long run, the objective will be fulfilled only when the transactions from PoS will leave the ATM behind. Which seems difficult now. According to SBI estimates, there is a loss of Rs 4,500 crore on POS terminals with Inter Bank Transactions. If this reduces the POS transactions in the same bank, then the total loss would be Rs 4,000 crore. The payment card industry works on 4 models. These models are the issuing bank, the acquisition bank, the merchant and the customer.