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As India pushes plastic over cash, POS terminal sales will surge, report says

September 7, 2016

Only 35 percent of India's population is banked today, but the government is working to remedy this with programs that will provide free bank accounts with ATM, credit and debit cards.

This sets the stage for explosive growth in India's payments infrastructure, according to analysis from growth partnership firm Frost & Sullivan.

The firm's report, "Analysis of the Indian Point-of-Sale Terminals Market," finds that the market earned revenues of more than 2.15 billion rupees ($32.4 million) in 2015 and estimates that it will reach 3.86 billion rupees ($58.2 million) in 2020.

Wireless POS terminals are growing rapidly and will outstrip wired terminals by 2022, owing to their ease of use and lower complexity, a press release from Frost & Sullivan said.

According to the report, India has seen a surge in adoption of POS terminals, however market penetration and consumer use lag behind Western nations due to:

• a huge gap in the cards-to-terminals ratio resulting from the lack of bank accounts; and
• hesitancy among small and medium-size enterprises to adopt POS terminals because they engage mostly in cash transactions.

Currently, POS terminal adoption is highest in Tier-1 cities, with Tier-2 and Tier-3 cities gradually catching up. Projects such as Micro ATMs and the Jan Dhan scheme are boosting investment opportunities in POS terminals in the rural areas, the report said.

"Healthcare, retail and entertainment sectors will generate considerable revenues in [the POS terminal] market, as customers prefer not to carry huge sums of cash to these points of sale," said Frost & Sullivan Electronics and Security Research Analyst KG Aiswarya. "Significantly, more than 80 percent of retail centers still do not have a POS terminal. This translates to substantial potential for the switch to plastic currency, with banks, card issuers and retail showrooms offering value-added services for card-based transactions."