‘Banks may risk losing ₹3,800 cr. from cards

‘Banks may risk losing ₹3,800 cr. from cards’: (The Hindu)

Context

As per the new report, the Centre’s digital payments push, mainly card payments through Point of Sale (PoS) machines, may leave already capital starved banks bleeding by Rs. 3,800 crore annually.

What is the cause?

Post November’s note-ban, the government has pushed banks into installing millions of PoS machines to encourage online payments.
This resulted in increase in debit plus credit cards transactions at PoS from Rs. 51,900 crore in October 2016 to Rs. 68,500 crore in July 2017.
The estimate was for OFF-US transactions, the aggregate annual loss for card transactions at PoS terminals is around Rs. 4,700 crore.
However, the net revenue gain per annum from ON-US transactions at PoS would be around Rs. 900 crore only.
Thus, the total annual loss to the industry is of around Rs. 3,800 crore.

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