Cash crunch: MPoS service providers record surge in transactions, sign-ups

The withdrawal of high-denomination notes has led people to realize the benefits of paying by card


A large number of small- and medium-sized retailers are now opting for PoS devices. Photo: iStockphoto
A large number of small- and medium-sized retailers are now opting for PoS devices. Photo: iStockphoto

New Delhi: With most people left scrounging for money after the surprise withdrawal of Rs500 and Rs1,000 notes on 8 November, mobile point-of-sale (MPoS) service providers have registered a record surge in the volume of transactions as well as the number of applications from merchants.

“In the last three days, transactions have grown by almost four times, from around 35,000 on usual days to more than 1.25 lakh transactions on Saturday. In fact, on Sunday, the number of transactions went above our capacity to process them and, therefore, we have now added more capacity. We expect the number to grow to 1.75 lakh in the coming week,” said Manish Patel, founder and chief executive officer of Mswipe, a mobile payment solutions provider.

“We are receiving close to 700 sign-ups every day for the past three to four days from merchants. Earlier, this number used to be just 150-200 per day. We are hoping to get a minimum three times boost to our business due to this move by the government,” he added.

“We are confident that this move will help allay many of the fears that people have in their minds about using cards,” Patel said.

“For some time now, we have been observing a gradual shift in the usage of debit cards to PoS. For example, according to July 2016 RBI data, debit card spends on PoS were growing at a six-month CAGR (compound annual growth rate) of 2.6% month-on-month (m-o-m) compared to 0.1% m-o-m for debit card spends on ATM. We expect the announcement to accelerate this shift of card swipes to PoS and significantly change user behaviour to look at cards as the primary mode of payment,” he added.

MasterCard, Mswipe and ePaisa are leading companies offering technology to enable smartphones, tablets or dedicated wireless devices that perform the functions of a cash register or a PoS terminal.

Siddharth Arora, co-founder of ePaisa, shared similar views. “We saw a 30% spike in new applications and these came through various sources, such as web traffic, inbound calls and social media. The maximum applications came from Mumbai (with a 37% increase), followed by Delhi (33%), Bengaluru (25%), Gurgaon (23%) and Kolkata (17%),” Arora said.

On the issue of cards not getting accepted at PoS terminals, Porush Singh, country corporate officer for India and division president for South Asia at MasterCard, said, “Despite the surge in electronic payments, MasterCard has not witnessed any downtime in processing merchant transactions. Our networks are designed to process 43 billion transactions per second. We are working closely with the banks and all our partners to ensure that our customers are able to make payments safely and conveniently 24x7 at 1.44 million PoS terminals across merchant locations in India.”

According to a study titled Indian M-wallet Market, jointly conducted by industry body Assocham and research firm RNCOS, the mobile payment transaction volume in India is likely to witness exponential CAGR of over 90% to reach 153 billion by fiscal year 2022, as against a meagre about 3 billion in fiscal 2016.

“People have started using their cards and wallets for daily transactions. We saw that customers were paying using mobile wallets like FreeCharge, MobiKwik and Ola Money to buy groceries at ePaisa-enabled merchants,” Arora of ePaisa said.

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