Payments company ItzCash said that it will deploy 100,000 POS terminals targeting small businesses and shopkeepers. Bhavik Vasa, chief growth officer at ItzCash, said that the company had started the POS business in early December 2016 and so far has deployed 30,000 terminals.

“Following demonetization, there was a lot of noise on QR codes could be a replacement to POS machines, but we had understood the acquiring business started deploying the quietly terminals to people in our network,” Vasa added.

The POS device accepts payments from credit and debit cards, prepaid cards and mobile wallets. Note that ItzCash’s machines also double up as a micro-ATM which where agents can dispense cash. The company has a physical network called ‘ItzCash World’, and has more than 75,000 franchisee retail outlets on it. These outlets will allow customers to swipe their cards at POS machines and agents will give cash from registers.

Vasa added that the company has three options for merchants to get a POS machines: a straight implementation fee model, a rental model and a hybrid model of both implementation and rental model. Merchants owning their POS terminal are also eligible to avail a pre-approved loan of Rs 25,000 for working capital requirements.

Card payments vs QR code payments 

Note that that following cash, debit cards are the most prevalent payment instrument in India with over 839 million cards in circulation. However, as we have pointed out many times, the POS penetration in India is woeful. As per latest Reserve Bank of India statistics, there are around 2.22 million POS machines in the country. Meanwhile, there is a concentrated effort by the government to improve the number of POS terminals. During the 2017-18 budget, finance minister Arun Jaitley reiterated the goal of setting up 10 lakh POS terminals in the country. 

Meanwhile, QR code payments still require customers to have a smartphone. In January, it was reported that the smartphone penetration in India was 300 million, as indicated by this IANS report. Paytm, which has over 200 million users, is the most prolific use case of QR code payments, has been pushing to acquire more offline merchants. Paytm alone has 5 million merchants and is looking to get 10 million by the end of this year.

Competition

Apart from banks, ItzCash will have to deal several other players who are growing their POS business:

– There’s MSwipe which raised $25 million in a series C round of funding from new investors Falcon Edge Capital, Ola Cabs and Meru Capital, and existing investors Axis Bank, Matrix Partners India and DSG Consumer Partners.
– In October 2015, Ezetap raised Rs 150 crore in a round of funding from existing investors Social+Capital, Helion Advisors and Berggruen Holdings and new investor Horizons Ventures.
– In June 2016, payment gateway aggregator PayU entered the POS space.
– Oxigen has a device called SuperPOS which also acts as a Micro ATM at Oxigen’s retail outlets.