Payments

RBI finally allows withdrawal of 1,000 a day from PoS through prepaid cards

MEDICI

Back in 2009, RBI had permitted using cash withdrawals from PoS through debit cards to enhance customer convenience. On the same lines, RBI passed an announcement yesterday which allows users to withdraw cash up to INR 1,000 a day through bank regulated prepaid cards. This is of great significance as the prepaid card industry, players and its bodies like PCI (arm of IAMAI) have been asking for it. It is also important to note that with just 80,000 ATMs and around 610,000 PoS terminals in the country, it allows for greater availability and financial inclusion.

RBI’s notification reads, “Hence, on a review of the position, it has been decided that the facility of cash withdrawal at POS with debit cards may be extended to such open system prepaid payment instruments issued by banks in India”

What’s interesting in the above notification is that RBI is calling out cash withdrawal at PoS terminals. This announcement of withdrawing cash through prepaid cards at POS terminals is in line with the new RBI Governor’s vision of allowing cash withdrawals at multiple locations, an additional way is setting up White-label ATM’s in India.

Companies like ITZ Cash Card (Freedom Prepaid Card), ICICI Bank (PayDirect Card, Meal Card, etc.), Axis Bank (My Money Card), etc have rolled out prepaid cards in the past.

Why 1000?

The team of ‘Lets Talk Payments’ was at 6th Financial Inclusion & Digital Payment Conference in Mumbai yesterday. Industry experts discussed the importance of 1,000 rupees in financial transactions context. According to the industry experts, people in India tend to use credit cards mostly for transactions worth over 1,000 INR. For transactions worth less than 1,000 INR, they pay it through cash. So till the time the limit is raised by RBI, Rs. 1000 may not be too bad.

LTP View: This move from RBI is another great move in the right direction awaited by the industry. Industry wants cash withdrawals from prepaid cards with high limits at both ATMs, POS etc. Its seem those days are not far - Raghuram Rajan (RBI Governor) also said “Given the vast potential of such instruments in meeting payments and remittance needs in remote areas, we intend to conduct a pilot enabling cash payments using such instruments and Aadhaar based identification," There is a high likelihood that there will be more partnerships which will emerge between public/private banks, prepaid/payment firms, retailers with POS to roll out prepaid card systems with withdrawals in India.

MEDICI Team

MEDICI

MEDICI Team is a group of content writers, bloggers, journalists, researchers, and editors from the MEDICI team who collaborate to create FinTech insights.

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