Digital payment hitting hard banks loosing, 3800 cr annually
The Modi government is constantly engaged in promoting cashless transactions, but this campaign is proving to be very difficult for banks. According to a report issued on behalf of SBI report, banks have to bear an annual loss of Rs. 3,800 crore from digital payments.
Increased pressures on banks’ pocket
Since the Demonetization, the bank has been constantly increasing the number of Point of Sale (POS) terminals and machines for cashless transactions. Where in March 2016 banks had installed 13.8 million POS terminals. After the Demonetization, their number has increased steadily and till July 2017, 28.4 POS terminals have been installed. Accordingly, the bank is charging an average of 5000 POS terminals every day.
Increase in Cashless Transaction
This has given a boost to the campaign of digital payment of Modi Government. According to the SBI report, after the Demonetization, there is an increase in the debit and credit card transactions, In October 2016, there was a transaction of 51,900 crore rupees. That same level has reached 68,500 million by July 2017. Apart from this, cashless transactions of Rs 89,200 crore were highest in December 2016.
Income of just 900 crores
SBI has said in its report, “We estimate that banks have to bear an annual loss of Rs 4,700 crore due to the transaction. However, Net Revenue of banks is 900 million rupees per transaction. In this way, they are facing a loss of Rs. 3800 crores annually.
Income from POS
For imposing POS terminals, banks have to bear the cost of infrastructure charges. It has to spend in other things, including setting up of POM terminals, clearing, settlement, training of traders, managing terminal and supplying them. Banks have income from merchant discount rate and month rental, which is very low.
Improve Telecom Infra
SBI report has suggested to the government to improve the telecom structure. It has been said in the report that if the government wants to increase its digital payments agenda, in the right direction, then it should arrange better spectrum for financial transactions.