RBI to boost card payments with 34% increase in PoS terminals by end of 2021

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As part of its Payment and Settlement Systems in India: Vision — 2019-2021, the Reserve Bank of India (RBI) is looking to enhance the usage of debit cards by improving the card acceptance infrastructure. The RBI is expecting to have 34 per cent increase in point of sale (PoS) terminals to 50 lakh (5 million) by end of 2021 from existing 37.22 lakh (till March 2019), as per its monthly ATM and card statistics.

“Given the current growth trend, it is expected to have 5 million active PoS by end 2021,” the RBI said in its Vision document released last week.

Along with digital PoS or QR code systems, which are also expected to increase “substantially”, the RBI said that the entire card acceptance infrastructure will be improved “six times present levels” by end of 2021 to drive vision for “cash-lite economy and also shift Cash on Delivery (CoD) transactions to digital modes for e-commerce,” the RBI added.

Debit card and credit card transactions through PoS for March 2019 stood at Rs 530,111 crore and Rs 576,511 crore respectively against Rs 418,567 crore and Rs 443,081 crore respectively for March 2018, as per RBI data.

Increase in PoS terminals and overall infrastructure would likely cut demand for cash and hence “over time achieve reduction in Cash in Circulation (CIC) as a percentage of GDP,” the central bank said even as there is no target for cash in circulation.

Further, debit cards-based PoS transactions according to the RBI is expected to be at least 44 per cent of total debit card transactions (including through PoS and ATM). In terms of amount, it is expected to be 22 per cent by the end of 2021 up from 15.2 per cent in 2018-19.

India’s total debit card transactions (PoS and ATM) were 1.2 billion for March 2019 up from 1.09 billion for March 2018.

Payment systems like UPI and IMPS are also expected to grow over 100 per cent in average annualised growth along with 40 per cent growth in NEFT. The number of digital transactions is expected to grow over 4X from 2,069 crore in December 2018 to 8,707 crore in December 2021, the Vision document said.

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