SBI Payment plans to double PoS units to 1.2 million by March 2022

SBI Payment Services Pvt Ltd (SBIPSPL) is planning to double the number of point-of-sale (PoS) units deployed by it to 1.2 million by 2021-22 (FY22). This is part of the company’s strategy to be a key player in the Centre’s ambitious plan to increase the number of PoS terminals across the country and, thereby, garner a significant share of digital payments at merchant outlets.

As of May 19 this year, SBIPSPL had 600,000 PoS terminals. The number is expected to rise to 780,000 by the end of FY20, and double (from its current level) to 1.2 million by FY22-end. The ramp-up plan comes three months after the company became a 74:26 joint venture between State Bank of India (SBI) and Hitachi Payment Services, a wholly-owned subsidiary of Hitachi.

The Reserve Bank of India’s (RBI's) data shows that the number of PoS terminals deployed rose to 3.72 million at FY19-end, or a rise of 18.6 per cent over the preceding financial year. For FY20, the government has set its sight higher -- a growth rate of 33 per cent; and over time, banks are to deploy around 8.5 million PoS terminals across rural areas and North-Eastern states. SBIPSPL wants to ride on the renewed thrust on PoS, and take on private sector banks in a big way.

Private sector banks led PoS terminal deployment -- both in terms of absolute numbers and year-on-year growth. The total PoS terminal deployment stood at 2.4 million at the close of FY19 for private banks, up 31 per cent over the previous financial year. The comparable figure for state-run banks was 1.1 million, down 0.8 per cent, and 0.07 million for foreign banks, up 6.7 per cent.

This will promote digital payment acceptance by a wider merchant community as it presents customers a wider choice of payment modes where they can pay through the QR code, debit cards or BHIM UPI. Reliance Jio Infocomm is set to enter this business with its plans to win over mom-and-pop stores to opt for PoS, and weave a payments ecosystem around them. Paytm, PhonePe, and GooglePay also plan to integrate payments, supply chain, and working capital.

A recent report by Worldline India — part of Atos, the Paris-based Euro 11-billion (in revenues) payments solutions major — said 29 per cent of transactions at PoS terminals were done using credit cards and these accounted for 52 per cent of the amount spent; it was 71 per cent and 48 per cent for debit cards. In Q1FY19, the average ticket size via PoS was Rs 3,476 for credit card transactions, while the same for debit cards was much lower at Rs 1,323. The reason for this, notes Worldline, “is the conservative nature of consumers who use credit cards for purchasing high-value items and debit cards for their daily purchases”.

SBIPSPL wants to leverage debit cards at about 925 million compared to 47 million credit cards in circulation which presents a great opportunity to increase the usage of the former at PoS units. The Nandan Nilekani report has also called for measures such as the removal of import duties on PoS devices and reduced GST on digital transactions; and wanted issuers to look at boosting the usage of plastic money.