Cash withdrawals: will PoS terminals come to the rescue?

Most of us queueing up outside bank ATMs are unaware of another option to draw cash — through point-of-sale (PoS) terminals at merchant establishments. Not only can you swipe your debit card for making purchases but you can also use the same PoS to withdraw cash. With a view to ease congestion at bank ATMs, the RBI recently increased cash withdrawal limit at PoS terminals at merchant establishments to ₹2,000 a day across all centres.

So far, one could make cash withdrawals up to ₹1,000 at PoS terminals in Tier- I and -II cities and up to ₹2,000 in Tier-III to -VI cities/towns. Charges on such withdrawals were up to 1 per cent of the transaction amount.

After waving ATM charges for customers, the RBI has also decided to waive charges on withdrawal of cash at PoS terminals. Hence, it may pay to find out about the facility at your nearest merchant establishment.

But does this bring a huge relief to you? Sadly no, as currency and software bottlenecks can pose challenges, according to market players.

Lack of availability of currency — aside from the need to recalibrate over two lakh ATMs across the country — remains a key issue. The RBI may have increased the withdrawal limit at PoS terminals, but merchants themselves may not have cash to dispense. With the Centre allowing petrol pumps to dispense cash, currency will most likely be supplied to them on priority.

Even if one assumed that currency is made available, a large number of PoS terminals need to be upgraded to support a withdrawal facility. Banks are now scrambling to upgrade their PoS or swipe machines, particularly at petrol pumps.

In the past, people did not consider opting for such a facility as it was easy to withdraw from an ATM, free of cost (upto five transactions a month in own bank ATM). Cash at PoS would entail cost — ₹10 for a ₹1,000 cash withdrawal.

Since merchant terminals were hardly used for withdrawal, most of the swipe machines have not been upgraded to dispense cash.

“When you go and swipe your card the merchant has to pay some fees (called Merchant Discount Rate) to the bank. In the cash at PoS option, the merchant does not pay anything, but the customer has to pay a charge of ₹10 per transaction. The software at the swipe machine has to recognise this and is configured separately called Cash-at-PoS transaction,” says Sunil Kulkarni, Deputy Managing Director, Oxigen Services, a payments solutions provider.

Of the 13-odd lakh PoS, only maybe two lakh GPRS-enabled new terminals may be configured to carry out a cash withdrawal transaction, he added.

To help tide over some of these issues, Oxigen is upgrading its PoS devices into micro-ATMs. Micro-ATM is a PoS device, which is a full-featured banking access and payments transaction device. It has an attached biometric scanner and thermal printer and is Aadhaar-enabled. So, anyone can deposit cash into a bank account.

“We continue to be the only wallet that provides loading through cash at our two lakh odd retail points, apart from banking channel. We are now leveraging this to set up micro-ATMs,” says Kulkarni.

“Any individual can offload his old notes which are then deposited into his Aadhaar-linked bank account through the micro-ATMs. Maximum amount that can be deposited is ₹10,000 per customer as set for Micro-ATM,” explains Kulkarni.

Once the money is deposited in the account, Oxigen enables a customer to load ₹2,500 into its wallet from this bank account which can then be used to make purchases at merchant outlets, thereby addressing the issue of small change at shops. The focus is on unbanked customers or people who are not comfortable with technology to load wallets using mobile banking/ internet banking/ UPI from their bank accounts.

However, acceptance of these wallets at various merchants will be critical if it has to make a meaningful impact.

“We are signing up physical merchants to enable acceptance of Oxigen wallet for transactions. Currently, we have deployed close to 600 micro-ATMs mostly in Delhi/NCR region and Bihar. More regions are being added,” says Kulkarni.