SBI Turns Your Shop Next-Door Into A Mini-ATM

Government owned banks like SBI are always looked upon a like boring place to be in. A behemoth in banking but a novice in innovation. So was it thought. But not after you read this.

Way back in July 2009, the Reserve Bank of India had permitted cash withdrawal at Point-of-Sale but the service had not taken off owing to various reasons including lack of clarity on processing fee structures.

Now, in line with RBI’s proposition to allow cash withdrawals through prepaid cards issued by banks from point of sale terminals, India’s biggest lender has come up with the Cash@POS facility across the country from last week, that lets merchant shops act as ATM counters.

Next time when you are in need of some quick petty cash, just walk into any of the shop that accepts credit card payments. If you are a customer of SBI or its associate banks, you can use the machine to withdraw cash up to Rs 1,000 from your savings account using your debit or credit card.

This helps customers to withdraw about Rs 100 to Rs 1,000 per debit card per day at any of these point of sale (PoS). This includes customers of State Bank of Travancore, State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Patiala and State Bank of Mysore.

There is no such thing as a free lunch – For now, a convenience fee of one per cent of the transaction amount will be levied on the cardholder which can be anything in the range of Rs 7.50 to Rs 10.

Does the Merchant benefit? Merchants will be paid an incentive of Rs 5 for every successful transaction along with the cash paid to customers.

SBI speak – “Though the facility will be made applicable to all debit cards issued in India, to start with, we are rolling out the facility with SBI group debit cards. SBI, which already has over one lakh POS terminals, will deploy an additional 40,000 more exclusive terminals before the end of this fiscal year,” said P.V. Rajamani, AGM, merchant acquiring business, of the bank. “In Tamil Nadu alone, there will be 15,000 POS terminals during the same time.”

Why start with SBI? As on June-end SBI, had over 20 crore customers and had issued 14 crore debit cards and accounted for 29 per cent of India’s total 1,23,705 ATMs.

Necessity is the mother of invention – RBI had instructed banks since years to concentrate on installing ATMs in rural areas. Withdrawal of cash from such POS releases the pressure on banks to speed up the ATM installation process, which is costly and cumbersome too.

Once this is successful, and we have no reason to say it won’t be, will private banks follow? Or will they come up with some more unique way of dispensing cash? Lets see…