Cash is the primary mode of payment or other financial exchanges for a large portion of the ecosystem. Mainly because cash gives direct control over one’s money. It is a physical resource contrasted with the digital money which cannot be accessed as easily as paper currency – a strong reason to resist for a technologically resistant user. Despite the efforts of the Government of India to drive cash-less, cash remains a preferred choice for business transactions and individual exchanges due to fewer dependencies and high anonymity.
However, less-cash countries are known for good in the world for their beneficial outcomes and effects on economic growth mainly due to the opportunity it provides to promote financial inclusion. Efforts of the Indian Government to drive Prime Minister Narendra Modi’s less-cash vision are convenient and truly necessary to promote economic growth and financial inclusion. Smart cities, smart governments, smart economies are in the midst of a digital revolution and electronic payments are closely linked to the digital revolution.
The cost of cash is substantial. Indian society as a whole will benefit tremendously by increasing the implementation of digital payments through payment transparency and collaborative efforts among customers, companies and government. Then also, the adoption of digital payments is low in India, primarily in Tier 3 and Tier 6 cities.
A helpful reference point to be kept in the mind is that digital payment acceptance ecosystem will fundamentally have to compete with and prevail upon the vigorous physical cash acceptance ecosystem to change transactions from cash to digital methods.
For the society to transform digitally, and transition of the society from a cash driven one to a less cash one, users can scale back their money holdings providing they’re assured of having the ability to transact digitally with having a safety net of a vigorous Cash In Cash Out network. Although this may seem counterintuitive, it is a significant safety net to build.
Bank branches, ATMs, business correspondents, and POS machines will have to be incorporated in an architecture of cash-in and cash-out networks. Each of the component of this architecture (ATMs, BC Agents, and POS machines) must be interoperable and capable of serving all banks’ clients.
The major use of cash is for financial exchanges, and subsequently, regulators must guarantee that all local markets have suitable cash-in and cash-out infrastructure. Local officials must ensure that transaction points are within a short distance from the Cash-In and Cash-Out points for easy access.
It is possible to further enhance the viability of the Cash-In and Cash-Out network by ensuring that business correspondents and Micro ATMs are prepared to deliver extra transaction services beyond Cash In / Out. These might be grocery outlets’ automation, bill payments, telecom recharge, mobile top-up, etc., for example. BC officials need to be encouraged by regulators to innovate in business models so that they can achieve viability.
Enabling Cash At POS
The country has at least fifteen times more POS machines than ATMs. While POS machines and Micro ATMs will expand substantially, ATMs will only cater for large volume use owing to their high costs. Additionally, when they need it, individuals need to have access to cash.
In order to boost digital transactions in relation to offering a security network for a strong Cash In Cash Out network, especially in Semi-Urban to Rural Cities, small merchants should be enabled to provide the clients with Cash At POS to satisfy their prompt needs. In this manner, with the designated merchants, customers should be permitted to withdraw a small amount of cash from POS machines acting as Micro ATMs.
What is Cash At POS?
Cash At POS is a facility where debit cardholders can withdraw money from any bank in India using their debit / prepaid cards (issued in India) from POS Machine at merchant places.
Talking about its benefits for the merchant providing the facility, cash withdrawal from POS machines by the customers empower merchants to recycle their cash holdings. It can be taken as a way for the merchants to deposit money into their bank account without having to visit the branch of the bank. The merchant is provided an extra source of revenue per transaction in the form of certain financial incentives. It saves merchant’s costs and labor for bringing money to the branch of the bank to deposit into his bank account. Merchants pay no extra fees to provide cash at POS facility to his customers.
According to the RBI guidelines, a customer can withdraw ₹ 1,000 in tier 1 and tier 2 cities via cash at POS, whereas in tier 3 and tier 6 cities, ₹ 2,000 per day per card can be withdrawn. The minimum amount of cash withdrawal is ₹ 100. There ought to be a case for increasing the withdrawal amount, however, all the more in Tier 3 and Tier 6 cities where there are fewer ATMs and that too at a lot of distance.
The Indian payment ecosystem is making the transition, from an issuance age to an accepting age. However, consumers will be more comfortable relying on digital transactions and carrying less cash if they realize they can readily withdraw cash when needed. Thus, the Government of India and Reserve Bank of India should pay due consideration to this subject in order to give a boost to digital payments in the country and merchants should be equipped with POS machines to provide the customers with cash at POS facilities.