The central government’s thrust towards cashless economy is rapidly changing the POS landscape in India. Recent demonetisation drive, rapid adoption of technology, rising internet penetration, changing regulatory environment and increased competition has resulted in surge in POS terminals as well as transactions.
Although POS terminals have increased by more than 1.4 million in the past one year from August 2016, high cost of POS terminals, low-ticket transactions, and poor profitability for merchant acquirers continue to remain key challenges. The top five banks account for about 65% of the market share in terms of transaction value, hinting at a slower pace of adoption by other banks. Moreover, the low spreads between merchant discount rate (MDR) of around 1% and cost of maintenance, consumables, transaction processing fee and other related charges remains a hurdle. Additionally, the cost of POS terminal ranges anywhere between Rs.15,000 for basic devices to Rs.60,000 for high end touch screen terminals. The growing adoption of Mpos (mobile PoS) which not only costs about third of the regular devices but also is easy to use, hints at more such cost-effective options to soon change the face of the POS market in India.