The Reserve Bank of India (RBI) is likely to allow money withdrawals from the point of sale (PoS) terminals using prepaid cards issued by banks. “RBI is considering to allow open loop cards to withdraw money from a PoS terminal. RBI is working on issues, like the amount a PoS owner should charge. The decision may come soon,” said a senior executive of a public sector bank.
There are three kinds of prepaid cards. Prepaid cards issued by banks are generally open loop cards, while non-banking finance companies (NBFCs) issue semi-closed loop cards, like telecom companies issuing prepaid vouchers, and close loop cards issued by firms like gift vouchers. Last year, RBI had put close and semi-closed loop cards under the Payments and Settlement Act.
There are 4.7 million PoS terminals in the country. ICICI Bank had recently entered into a tie-up with First Data to set up PoS terminals.
A PoS terminal is predominantly used for payment for sale and purchase transaction, while an ATM can be used for several other services like balance enquiry.
In this case, the bank pays charges which is split among the card-issuing bank, the bank that owns the PoS terminal, the payment company, Mastercard or Visa, and the place where the PoS terminal is located.
“We expect the growth to be around 50-70 per cent in the coming years. There is a huge potential in this industry, as it efficiently generates income for the issuers,” said Sachin Khandewal, senior general manager, ICICI Bank.