More PoS Terminals to Hit Tier2, Tier3 Cities

by Prabhu Ram    Jun 10, 2009

PoS terminals, having gained significance acceptance in urban cities, are now ready to make it tie-2 and tier-3 cities. New POS terminals, apart from the traditional use of digital payment will offer a gamut of value added services through them.

Following on the footsteps of telecom players, enticing opportunities among SMEs in tier 2 and rural areas seems to have become a gold rush for banks.

In a recent development, the Corporation Bank signed a PoS agreement with Prizm Payment and MRL Posnet to promote point of sales (PoS) terminals targeting small and mid-size merchants in such cities.

Talking to CXOtoday, Dilip Asbe, CTO of Prizm payment services, said that Corporation Bank’s agreement follows suit with other major banks similar initiatives.

Implementing CDMA technology in PoS is beneficial because of end to end digital network than existing dial up networks on which 95% POS/EDC machines in the country working. "A typical response time for CDMA phone is 7 to 8 seconds compared to dial up 12 to 15 sec time,"said Asbe.

Commenting on the trend, he said SMEs in India transact in cash and hence there is a limitation of services that can be offered. But with VAS-enabled PoS, merchants can enable payment of monthly utility bills, book transportation tickets, etc. "A small merchant can potentially be empowered to become a single point of sale," said Asbe.

The installer of the POS terminals will be acquirer of the terminal and the merchants will have to hold an account with the acquirer’s bank (merchant account). Each transaction will be levied with 2% which will be shared between PoS acquirer and the bank.

Asking if m-payment would also play a part going forward, he said the problem with mobile payment is there is no standard operating rule and regulations. In case of card payment, VISA and MasterCard having been for year have strong founded regulations.

The challenges of implementing PoS will be primarily the speed of role out (operational cost) and viable business model from the tier 3 or 4 cities. Once technology is set and stabilized POS will gain significance PAN India, said Asbe.

Coming back to Corporation Bank’s rollout, MRL Postnet will be responsible for the installation of PoS systems. Kishore Kothapalli, MD of MRL Postnet said the first PoS would target the medium and small merchants in Hyderabad and Chennai. "Training and contact center will be setup for merchants who will signup to offer services trough PoS," he said.

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