The Centre’s decision to demonetise high value currency notes has increased merchant demand for Point of Sale (PoS) devices ten-fold, and has resulted in a significant change in consumer behaviour, according to Mastercard.
“What has happened now, since demonetisation, is that you have people coming to merchants wanting to use cards, and the number of merchants wanting PoS devices has also increased,” Porush Singh, Country Corporate Officer, India & Division President, South Asia at Mastercard told The Hindu . “The number of merchants who want the device now has increased ten-fold. So you are seeing a move happening on both sides.”
“People at the bottom of the pyramid didn’t want to do electronic transactions,” Mr. Singh said.
“Instead, they wanted to take out cash. This is despite the fact that there are only 200,000 ATMs and 1.4 million PoS devices.”
“In a nutshell, since demonetisation, we have seen more frequent usage and lower ticket sizes,” Mr. Singh said. “People are using cards to buy groceries, at food stores, and to pay fuel bills. That’s what I meant about a behaviour change, that despite fuel pumps being allowed to accept old notes, there was a marked increase in card transactions there.”
14% CAGR
The last four years has seen a 13-14 per cent compounded annual growth rate in the acceptance of electronic transactions, according to Mr. Singh, which rose sharply to 30 per cent recently.
“Now that 30 per cent number is looking small in light of the fact that the government wants an addition of one million more devices by March 31,” he said, referring to the government’s announcement on December 6, asking banks to add one million more PoS devices by the end of the financial year.
One of the biggest reasons for the growth in acceptance of electronic transactions, Mr. Singh said, was the significant reduction in the price of PoS devices. “The cost of devices is the biggest barrier always, especially in an economy that has fewer electronic transactions as we see today,” he said. “And this has come down substantially. Depending on the manufacturers, the cost has come down to one-third of what it used to be.” These changes have come in the face of massive resistance to the move to electronic transactions posed by the “shadow economy,” which had made electronic transactions uneconomical.
