Digital drawback: Only one PoS terminal in India for every 358 people

India may have imposed a ban on high denomination currency notes over three years ago, but a slow pace of development in digital infrastructure and a high cost has been delaying its transition to cashless society.

Now, the Reserve Bank of India, which has announced an additional fund to give a push to digital infrastructure, has also released a cross country dataset, which says that the density of population dependent on a point of sale (PoS) terminal to make electronic payment of their purchases is 358 in India, as against about 20 in neighbouring China, about 10 in Brazil, Turkey, Netherlands and Italy.

The dataset from about 22 countries shows India's is the worst when it comes to availability of PoS machines per person. Indonesia has a population density of about 210 per PoS terminal.

India's situation has, however, improved since 2014, when the country had only one PoS machine for over 1,120 people.

“The factors inhibiting the digital push are connectivity issues, inadequate acceptance infrastructure, lack of familiarity with newer, alternative payment methods, delay in getting complaints resolved and security and privacy concerns,” the RBI said in its assessment report on digitisation in India.

The RBI has acknowledged the same and to address these issues has put in place systems like, consumer awareness programmes, ombudsman schemes, increasing the category of billers in Bharat Bill Pay.

It said the world over, cards have replaced cash as a mode of making payments, except in traditionally cash denominated jurisdictions like Germany, Italy, Japan and Russia. In India, the shift has been to electronic/ digital channels.

Infrastructure is the key requirement facilitating electronic payments, the RBI said. But bank branches, which facilitate electronic payments, have witnessed a growth of only 3.5% in the last five years.

RBI said another important acceptance infrastructure gaining popularity was the digital PoS or the QR code.

Bharat QR has grown as a lightweight, low cost method to bring merchants into the acceptance network. The deployment of QR codes is expected to increase substantially in the coming years which along with physical PoS terminals will facilitate the rapid adoption of digital payments, it hoped.

Late last year, over 1.6 crore payment QR codes,Bharat QR as well as proprietary QRs of other payment system operators were deployed. A committee has been constituted by the RBI to examine, review and finalise a pan-India, inter-operable QR code structure.