An ATM at your kirana shop

The next time you fall short of cash while on a shopping spree, you may not have to rush to the nearest automated teller machine (ATM). The Reserve Bank of India (RBI) has allowed banks to set up electronic retail machines at the merchant’s establishment, popularly called point of sales (POS). This will allow you to withdraw cash — up to Rs 1,000 at one time — with your debit card at the shop itself.

At least five banks — Union Bank of India, ICICI, HDFC Bank, IDBI and Axis bank — have started installing these electronic retail machines or cash at POS machines at merchant establishments across select cities. This should soon be a pan-Indian service, as the network expands and other banks follow suit.

Importantly, it can be done with or without purchasing anything from the enabled merchant establishment with POS terminals. If you withdraw cash at merchant establishments along with the purchase of merchandise, the receipt generated should separately show the amount withdrawn.

This move will particularly benefit those who do not like to carry cash. One can use this to make small purchases or to pay cab fare. But for bigger purchases, this facility does not work so well.

Moreover, although the merchant establishment will not charge a fee for dispensing cash, your bank could. While this service is free for IDBI and HDFC Bank’s debit cardholders, both ICICI and Axis Bank are currently levying a service fee of Rs 10. At this cost, paying through your debit card rather than cash will be cheaper. Also, don’t use to withdraw very small amounts because the cost, as applicable in some cases, is not worth it.