Shop owners wary of cash withdrawals from swipe machines.
Although the Reserve Bank of India has allowed shops to act as ATMs, the people meant to serve as banks' new touch points - the shopkeepers - will have to be convinced first.
On July 22, the Reserve Bank of India had issued a circular permitting cash withdrawals of up to Rs 1,000 per day from point-of-sales (PoS) terminals at merchant establishments. PoS terminals are machines where customers can swipe their credit or debit cards to pay for purchases. Says Jayesh Sangoi, a Mumbai-based clothes' retailer, "Already, there have been many cases of credit fraud. What happens if a customers just walks in with a fake card, and leaves with cash?
Sanjay Agarwal, another Mumbai-based clothes retailer is sceptical, but says they might offer this service, if others do so.
Bankers feel these fears are unfounded and cash withdrawal will not be the shopowner's liability. "Since debit card transactions are online, the customer's account is debited immediately. The chances of fraud are low," said B R Bhatt, General Manager at Mangalore-based Corporation Bank.
However, banks agree that shopowners will have to be educated about the safety and benefits of this service. "It is not a concept that is going to touch home from the first day. When credit cards were first introduced, shopowners had apprehensions about these as well," said Sai Narain CDK, genral manager at Standard Chartered Bank.
There are other issues. "How do we separate such withdrawals from other transactions so that the income-tax department doesn't tax us on them?," asks Mitul Jasani, who runs a opticals store in Ghatkopar, a suburb of Mumbai. But, he admits, customers have already started enquiring about the facility, since reports have appeared in newspapers.
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Banks are likely to face a few complications as well. "Right now, PoS terminals are only enabled for merchandise transactions. They will have to be equipped for withdrawals as well. Also, they have to ensure that a customer sticks to the limit of Rs 1,000 per day, even if he swipes his debit card at multiple PoS terminals," Bhatt said.
Most bankers are unanimous that this service will come at a cost which will have to be borne by the customer. "It will not be economical for banks to offer this service free-of-cost. As long as we are allowed to charge fees, we will be happy to provide this service. The revenue and cost dynamics will have to work out," said a senior executive of a foreign bank.
What is unclear is whether the merchant establishment and the card-issuing banks will have to pay the switch operator and the acquiring bank a charge as well. "There is a chance that either the retailer or the bank will also be charged. There is a case for the retailer to be charged. Since he will be dispensing surplus cash, he will save on costs associated with depositing that cash with a bank," said an executive of a public sector bank, who declined to be named.