Introduction of Chhota ATM: Evolution of the Financial Inclusion Programme

Introduction of Chhota ATM

The largest PSU bank SBI (State Bank of India) has introduced the Cash@POS informally known as “Chhota ATM” to withdraw money at far off places. As the objective was to expedite the spirit of Financial Inclusion Programme, initially no charges were being levied to the users of Cash@POS to withdraw money.

The debate among service providers arose, with the initiation of levying charges to the users of the Cash@POS by the PSU bank SBI, as per the guidelines of RBI. This step is being criticized as against the so called issue of Financial Inclusion Programme to be achieved & also would hinder its successful implementation target.

The SBI was the first bank to start the ‘Chhota ATM’ at merchants location to spread it across states. The easy availability of money for the sake of ‘Chhota ATM’, to the debit & prepaid card holders (issued in India) became a boon, without paying any extra charges. The income opportunities are also offered, after every successful transaction, to kirana store owners, roadside shops, medicine shops, cable operators, etc. as POS (Point of Sale) dealers.

In spite of millions of RUPAY card holders following ‘Pradhan Mantri Jan-Dhan Yojana’ in rural India, there are hardly any ATM close to their homes or places of work, but Cash@POS reaches out to them. “Charging the card holders for withdrawing money from Chhota ATM will affect the process of expanding the network of ‘Chhota ATM’. There are discrepancies in charging such as, certain charges are levied against some cards for withdrawing money while some others aren’t charged for the same, said a local merchant from Kolkata, who is one of the merchants from SBI’s Cash@POS.

Features of Chhota ATM

  1. The Cash@POS allows debit/prepaid card holders (issued in India) to withdraw cash by swiping them at SBI’s POS terminals at merchant locations.
  2. A merchant can disburse cash from `100 to a maximum of `1000 per card per day.
  3. The Cash@POS is offered to the merchant against a 499 INR (as a non-refundable deposit) along with a rental fee of 150 INR with `5 as commission per transaction.
  4. Transactions done through Cash@POS are settled the next day into the merchants bank account.

How Cash@POS works

The authorized person carrying the machine has to carry a certain amount of cash with him/her. When a card is swiped, the card holders account gets connected to the server through the mobile or GPRS network and the amount gets debited. The authorized person hands over the cash against the slip generated from the machine and at the end of each banking hour, his/her account is credited with the entire amount plus `5 per transaction. The solution is certified by all the required standards – EMV, PCI-PTS, PCI-DSS, which are standards in the payments industry. This means that the card reader and PIN entry are exactly at par and certified as per the same standard as any other ATM.

The shop owners or POS dealers who offer mobile recharging service receives a commission @ 2.75{f723c0ef2b87b19843560edc416a2a968fa0047bd906562716d71ed5a9227d36} of the total transaction value from the merchant. The SBI also provides “The State Bank Cash Point: Chhota ATM”, display posters. At present debit cards of all major banks including AXIS & HDFC along with State Bank group debit cards are accepted at SBI’s POS terminals for Chhota ATM.

Charges for using Cash@POS

The charges to the State Bank group card holders for using Chhota ATM is 1{f723c0ef2b87b19843560edc416a2a968fa0047bd906562716d71ed5a9227d36} of the amount swiped, subject to a minimum of `7.50 and maximum of `10 per transaction, which was waived off till March 2015.

For using debit cards other than SBI group, the charges for using Cash@POS is decided by the issuing bank and conveyed to their cardholders. The cardholders can contact their respective banks to know the charges. No extra charges will be levied by the merchant.

Is ‘Chhota ATM’ a viable solution in the current “Financial Inclusion Programme”?

For example in the US, any grocery store accepts card payment & also allows you to withdraw cash up to 100 USD. Although in India, this solution is still under scanner & will mature in the coming months. Already implemented in the rural areas, this solution has generated an income source too for many young citizens and a group of people. Cash@POS also helps the cardholders to swipe their cards in a nearest shop without travelling 10 KM from their residence for availing an ATM. Introduction of Prime Minister’s Jan-Dhan Yojana have already ensured that every citizen or a family must have bank account so as to ensure that their earnings are safe with the bank.

If these small cash dispensing machines are in effect then there’ll be fewer ATMs thus reducing the maintenance costs for financial institutions as well.

The dawn of a new age is surely knocking the neighbourhood when every store owner will act as an ATM.

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