Money Merchants

Do you often run out of cash when you go shopping? If you need to withdraw some money from your bank account, you will now have the option to walk into a merchant establishment with your debit card.

Around 18 months after the Reserve Bank of India (RBI) allowed withdrawal of cash at point of sale (POS) terminals with merchants using debit cards, ICICI Bank and Axis Bank have launched the service on a pilot basis.

Debit card holders of the two banks can withdraw up to Rs 1,000 a day as mandated by the RBI. Cash can be withdrawn with and without any purchase transaction. Axis Bank is offering the facility only in Vijayawada in Andhra Pradesh. It plans to roll out the service across the country by the end of 2012-13.

Banks have been increasing their ATM (automatic teller machine) networks, but the large number of card-swipe machines at shops offers a wider reach. Debit cards are more popular in the country. India had around 21.2 crore debit cards in November 2010, against 1.8 crore credit cards, according the RBI's data on retail electronic payments.

"The launch of cash withdrawals at POS terminals will create a new mode of access to financial services, which not only enhances customer service but can also be leveraged for financial inclusion," says Chanda Kochhar, managing director and CEO, ICICI Bank.

"The ability to offer cash has been welcomed by merchants as the facility promises greater customer footfalls at their outlets, which may, in turn, translate into possibilities of higher turnover," says M.V. Subramanian, president, business banking, Axis Bank.c