RBL Bank (Ratnakar Bank) has dwarfed entrenched players including State Bank of India (SBI), Axis Bank, HDFC Bank and ICICI Bank in terms of the number of Point of Sales (PoS) deployed.
Thanks to over 100% growth in the last 12 months in the electronic devices used to process card payments at retail locations, RBL Bank is No.1 today with over 6.52 lakh PoS deployed in the country. This is individually more than the 5.77 lakh of SBI, 5.07 lakh of Axis Bank, 4.46 lakh of HDFC Bank and 3.7 lakh of ICICI Bank, RBI data shows. The PoS, or swipe machine, is provided to a merchant establishment (ME) to carry out the sale of goods or services to customers through a cashless transaction.
Through strategic support from Mastercard, RBI Bank managed to gained huge muscle in the PoS area and added over 500,000 merchant acceptance or Point-of-Sale (PoS) locations since demonetisation in November 2016, bank officials said. The major participants in PoS are acquiring bank (which has installed the PoS terminal at the merchant location), card network (RuPay/Visa/MasterCard), customer, and issuing bank (which has issued the card to the customer). Each month across the banking industry, there are about 15-16 crore credit card PoS transactions and about 37-38 crore debit card PoS transactions a month, generating a total of over Rs 1 lakh crore in transaction volume.
PoS has become very popular with merchants not just because cash handling is avoided. Customers have a tendency to do higher purchases/impulsive buying while using the card than cash, translating to more sales and higher profits for merchants. Also, a customer's frequency of visit to a merchant increases substantially due to the PoS facility.
To widen its digital payment acceptance footprint, RBL Bank also signed pacts with several payment facilitators. These arrangements allowed the bank to expand its payments acceptance network in Tier II and III cities, said industry experts.
As per RBI data, SBI at the end of December 2017 was the number one in terms of PoS with 6.33 lakh machines deployed, but saw a 9% decline over the next 12 months. In the same period, RBL Bank notched up 106% growth as PoS deployed grew from 3.16 lakh to 6.52 lakh. Among the top banks, Axis, HDFC and ICICI registered 6-10% growth in the same phase.
The massive growth in PoS for RBL Bank has not only helped it unseat SBI, but today this small bank has more PoS deployed than the combined number of 34 other banks, including IndusInd, BoB, PNB, Union Bank, Amex, Citi, IDBI, KVB, Canara, etc.
In the PoS system, the bank that has installed PoS at the merchant location gets a commission (merchant discount rate, or MDR) from the merchant for the transactions performed on the PoS machine. Authorisation fee is the service fee paid to intermediary agencies – MasterCard, Visa and NPCI – for facilitating interbank payments. Also, the bank that has installed the PoS machine pays an interchange fee to the card issuer bank for promoting payment through cards.
