RIL co, Atos in race to man PSB ‘swipe’ 28 Banks Invite Partners To Operate 20L Point Of Sales Terminals Across India

Mumbai: A group firm of Reliance Industries and French IT services major Atos are among the shortlisted service providers to public sector banks wanting to deploy at least two million point of sales (POS) terminals-—debit and credit card swipe machines with merchants—boosting electronic payment in smaller towns within 24 months. India has more than 314 million debit cards but less than 10% of them are used for transactions at shops, and that too mostly in top ten metros.      IDBI is managing a reverse auction process to identity service providers who would manage the swipe machines, after the government pushed the banks to hasten electronic payment in a consumption driven economy, riding heavily on the Middle India story. About 28 public sector banks would outsource their swipe machines to four service providers, dividing the market into four circles with each deploying up to seven lakh POS terminals in two years.      India's leading automated teller machine (ATM) managers Financial Software & Systems (FSS), Prizm Payments and AGS Infotech are vying with Reliance Payment Services and Atos India to manage these swipe machines, said people familiar with the matter. However, some of the biggest global deployers of swipe machines like First Data, which manages the merchant terminals for ICICI Bank, have not bid for the public sector bank business. RIL unit's bid is interesting since it fits well with its chairman Mukesh Ambani's big 4G rollout and retailing plans.      RIL declined to comment on the story, while Atos India CEO Milind Kamat said he would not comment, citing non-disclosure agreements. Atos has set up a local transaction and payment subsidiary, through an acquisition of Venture Infotek 18 months ago, which is already working it private and PSU banks. Private banks like HDFC, Citibank, Axis, ICICI and HSBC together have about 7 lakh, while the PSU banks have 88,000 merchant terminals in the country. Their network is skewed towards the top metros, notwithstanding a footprint covering 300 cities and towns. The big PSU bank push over the next 2-3 years could see the electronic payment infrastructure reaching even rural-urban centres with just 5,000 people, said a source cited earlier.      "If customers pay by debit card the money continues to remain with the banking system increasing its lending resources. There is evidence that increased penetration of credit cards provides a boost to consumption demand," said Uttam Nayak, country manager, Visa.      A recent Moody's report said that global real GDP was only 1.8% per annum (2008-2012); without increased card usage, that growth would have been 1.6%. Banks are hoping to replicate the model it adopted in faster ATM rollout in recent years. India's ATM network crossed one lakh last year with public sector banks deploying 60,000 through service providers. The investments are made by service providers who receive rent for each transaction. By centralizing the deployment and promising volumes, banks were able to hammer down transaction costs by almost half.      Acquiring bank, merchant and service provider would jointly decide on the type of POS terminals. Some of them in areas where customers cannot use PIN/OTP might come out with biometric scanner. Banks are likely to offer a six month rent free merchant acquisition strategy to quicken the deployment process. The service providers are planning to expand the terminals to offer value added services like airline ticketing booking and bill payments.      Manufactures of the card swipe machines said they would push down the POS costs to back government's plans to build the electronic payment network. "This is a bold move and there's scope for lower prices despite terminals costing lesser than in many global markets already," said Pran Mehra, country head, Verizon, which provides banks with swipe machines. The merchant terminals cost between Rs 4,000 and Rs 7,000 each on an average.