The country's largest lender State Bank of India (SBI) has said in a research report that banks stand to lose Rs 3,800 crore annually due to the investment in card-swipe machines as costs outstrip revenues. As of July, banks had a network of 28.4 lakh card-swipe machines — almost double the 15.1 lakh in existence before demonetisation.
The key reason behind the loss is that average monthly transactions in a point of sale (PoS) terminal continue to be around 150 per month, while the transaction charges on debit cards have been reduced sharply. "In order to encourage card payments, the government has been pushing banks to install more number of point of sale machines and banks are installing on an average 5,000 PoS a day. But the transactions at PoS are increasing at a much slower pace," said the SBI report.
It added that if transactions do not gain momentum, this would raise the question of viability of the business for acquiring banks. Acquiring banks are those who install the card-swipe machines as against the 'issuing banks' — a term used to describe card issuers.
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