The Reserve Bank of India (RBI) is to allow cash withdrawals from the point of sale (PoS) through prepaid cards issued by banks. The public sector banks have got into action to use the opportunity to increase additional income by increasing the card base.

A PoS terminals is mainly used for payment for sale and purchase transaction while ATM can be used for several other services like balance enquiry. There are about 4.7 million PoS terminals in the country. Pre paid cards can be open loop cards, semi-closed loop cards and close loop cards.

A few private banks like ICICI and HDFC already run PoS machines while India’s largest bank, State Bank of India (SBI) is planning to acquire 50,000 PoS machines and Bank of India (BoI) has already floated request for proposal for a similar number of machines. ICICI chief expects a growth of 50-70 per cent in the sector and said that it generates high returns to the issuers.

The competition in the segment may intensify as many banks look to enter. SBI indicated that it has received necessary approvals and are now in talks with some global players for a joint venture for the segment. SBI has also indicated that the bank want to open around six lakh PoS terminals in five years’ time.

While Bank of India has four contenders including Venture Infotech, Fidelity International, Financial software services and a venture by Tata group to provide PoS terminals. The bank has 25,000 PoS at present and plans to acquire another one lakh.

At present there are 240 lakh credit card holders in the country. SBI has about 6 crore debit card holders while BoI has 1,65,000 holders.