• Post demonetisation, we witnessed almost a 100% rise in our PoS (point of sale) transactions. This is a result of banks aggressively deploying more PoS machines. Also, customers are opting for digital payments as cash (in denominations as required) is not easily available.
• The deployment of PoS machines has witnessed a rise post demonetisation as there has been a tremendous increase in demand from all strata of society, including SMEs, retail stores and small shopkeepers, among others.

• The pace would be dependent on many factors, including penetration of non-cash infrastructure (currently penetration of ATMs are much higher as compared to POS), and how quickly customers adopt these new technologies.
• Availability of necessary infrastructure – whether for cash or non-cash transactions – will enable easy access to banking services.
• All these will determine how quickly we can get the un-banked population into the banking system.

• The cash recycling machines (CRMs) are the true future of ATMs in India.
• The CRM has emerged as a better alternative to the traditional ATM as it can accept and validate cash as well as dispense the same cash to customers.

• Increasing penetration of smartphones and use of mobile Internet in the country coupled with favourable government policies have opened up many new payment options such as mobile wallets/mobile app-based payments.
• These new age payment technologies provide ease of use, speed, convenience, enhanced customer experience, and are redefining the way banking is done in the country.

• For financial institutions, the cost of handling cash represents a significant part of ATM operating costs.
• A CRM is an ATM designed to recycle deposited cash for use in subsequent withdrawal transactions.
• The benefit of deploying a cash recycler is enhanced efficiency — both in terms of operations as well as costs.
• It minimises the cash handling costs with lesser number of cash replenishments, enables 24 X 7 availability for deposits and withdrawals and better utilisation of branch teller time.
• Also, deployment of CRMs in areas that do not have physical bank branches will go a long way in easing transactions that would otherwise have to be conducted at the physical branches.

• Currently, close to 20 to 25% of our ATMs are running dry due to non-availability of cash.
• Additionally, it seems that the cash that is going out is not coming back into the system, which is a cause of concern.
• People are withdrawing more money which is evident due to increase in average withdrawal per ATM transaction. The solution would be to increase the pace of remonetisation.

• While digital transactions are picking up, we feel that cash transactions will also continue to grow in the future.
• This is considering that cash is still the convenient form of payment option for many low value transactions.
• Even in developed markets such as the U.S., which has higher penetration of digital payments, cash transactions still account for a decent chunk of the overall retail transactions.

The growing importance of UPI would further increase the non-cash transactions as we enable transaction processing to facilitate such payments.

Source: TH