POS Terminals-Requisite for ePayments

POS Terminals-Requisite for ePayments

The success of Debit card depend on the presence of POS (Point of Sales) Terminals.

A point-of-sale (POS) terminal is a computerized replacement for a cash register. Much more complex than the cash registers of even just a few years ago, the POS system can include the ability to record and track customer orders, process credit and debit cards, connect to other systems in a network, and manage inventory.

POS terminals are deployed in retail establishments to enable customers to make payments through debit, credit or pre-paid cards.

Presently, the POS Terminals are mainly of Private Sector Banks. However, recently, Public Sector Banks too have entered the fray.

Union Bank of India and Corporation Bank, have firmed up major expansion plans in the POS Arena.

The Benefits to Bank, via a large POS Network are

01) Increase in Float Funds in current accounts, of the Merchant Establishments.

02) Commission on every transaction, executed on its POS Netowork.

03) Brand Boosting Image, amongst its existing and potential customers.

Currently, the POS Terminals are concentrated in Tier 1 cities. Real success will be achieved by Banks, who spread their POS Network, in Tier 2 and Tier 3 cities.

The Banks at the same time, should publicize the benefits of Debit Cards amongst their customers.

Benefits to Cardholders

• The card is very convenient as it eliminates the need to carry cash
• The cardholder does not need to visit the bank to load the card as the card gives access to his/her bank account
• Since it is PIN protected, it is safe as long as the cardholder does not compromise his/her PIN
• Cardholders can access cash not only from the ATMs but also from the PoS terminals at merchant outlets
• Cardholder can perform balance enquiry at PoS terminal
• Fast, real-time transaction speed.

• Bank access to all information transacted on the POS.
• Higher security for merchants.
• Takes services closer to Bank’s customers.
• Reduction of cash related risks.

However, to increase the safety levels of Debit Card usage, it is opined, that Banks issue separate ATM and Debit Cards. The main advantage of this separation is that incase of loss of card, the actual loss to the cardholder will be minimized.

Of course, the operating costs to the Banks will shoot up substantially. The above idea, can be implemented when Banks acquire issue large number of Debit/ATM Cards.

A separate post on Commissions/Transaction Fees on Debit Card Transactions will be dealt later.

Enjoy and Spread, the Magic of ePayments