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Why it is difficult to scale POS machines in India

Earlier this month, the Reserve Bank of India (RBI) said it would be setting up an acceptance development fund (ADF) to boost the card payment infrastructure in the country. The proposed ADF which will be funded by card issuers to build a corpus by diverting a percentage of their transaction revenue into the fund. Money from the fund is then invested in structured initiatives to expand acceptance infrastructure such as POS terminals. We have the dubious honour of having one of the lowest POS terminal penetration, according to an Ernst and Young report.  The report said there were only 693 machines per million of India’s population, compared to similar emerging countries such as Brazil, which has 32,995 terminals per million people and China and Russia, each of which has around 4000 terminals per million people. This was back in 2015 and the number of POS machines issued from banks has improved to over 14 lakh in July, as shown by RBI data. Isn't it odd that there are over 697 million debit cards and 25.94 million credit cards and there are only 14,43,899 POS terminals in the country? Indeed, the RBI, in its concept paper to boost card acceptance, points out that people primarily used their debit cards to withdraw money from ATMs. Closer look at POS terminal data However, a if we look at closer at the POS terminals deployed in the country, we see a curious concentration. The top banks in the country - State Bank of India, ICICI Bank, HDFC Bank, Axis Bank…

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