1. Case for POS
Deployment - India
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2. What is POS ?
 Point of Sale (POS) terminals are small
desk top electronic devices deployed at
Merchant shops
 On swiping the card, POS authorise the
transactions after obtaining approval
from the card issuing bank
 POS enables cash less transaction
 POS enable all type of Card Payments
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3. Let us understand POS
 Customer Accounts are debited instantly and
merchants accounts is credited after the settlement
(net settlement) through settlement bank
 These terminals are connected to POS network
through dial up telephone
 Recently POS terminals are coming with mobile
connectivity (both CDMA and GSM) thus enabling
mobility of the terminals to any part of the shop
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4. Operation of POS Terminal
 When the customer handover his debit or credit
card for his purchase, the merchant swipe the
card in his POS terminal to get authorisation
from Visa/Master network
 The POS network will take care of
authentication from Visa/Master network which
in turn is connected to respective Card Issuing
Banks
 Merchant’s Bank account will be credited once
the settlement happens ( T+1)
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5. How POS network work?--
contd– Customer card is swiped in the POS terminal by the Merchant
Step 1

 Step 2- Transaction value is passed on to POS gateway
 Step 3- POS Gateway will switch the transactions to Visa /Master
network
 Step 4 - Visa / Master will route the transaction to the card issuing bank
 Step 6 - Member bank will authorise the payment after debiting his
Customer’s account
 Step 7 – Visa/Master will send successful message to POS gateway
 Step 8 - POS gateway will pass on the message to POS terminal
 Step 9 - POS terminal will print the charge slip
 Step 10 – In the end of the day Merchant will effect settlement using the
POS Terminal which will generate total amount customer wise
 Step 11 - After periodic settlement, Merchants Bank account will be
credited with sale value – T+1
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6. Work Flow of POS network
P
Mer1 O
S
Customer1 Visa/Master
S
w
Mer2 it
ch Bank2
Customer2
Payment via RTGS/EFT etc
Bank1
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7. Participants of POS
transactions
 Customer – who own debit or credit card
 Merchant – POS is deployed in the shop
by a Bank or POS vendor(Intermediary)
 Card Issuing Bank – the bank who issued
Visa or Master card to its customer
 Card Acquiring Bank – the bank who owns
the POS terminals
 Settlement Network – VISA /MASTER
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8. Advantages to Customers
 No need to carry cash
 Acceptance for wide range of retail
payments
 Ease of use
 Loyalty or Bonus program
 Tracking his purchase is easy as each
transaction is debited to his account
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9. Advantages to Merchants
 Will increase the sale volume
 Eliminate cash risk
 Loyalty /Bonus program to retain/attract
customers
 Better relationship with his Bank
 Customer tend to purchase more
 Simplifying the sales accounting
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10. The Card
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11.  The success of POS business model
depend on structuring the MDR
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12. Future trend
 RBI will allow more type of transactions
through POS ( like mobile top up, ticketing
etc)
 Spending pattern will shift from cash based
to card based (refer ICICI data slide)
 ATM transaction will come down and POS
transaction will increase
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13. Future Trend - contd
 Globally there is growth of POS terminal
10.77 million units by 2010
 Asia-Pasicfic region is the major growth area
 As expected China leads the growth followed by
India
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14. Future Trend -
contd
 As on December 2008, the number of credit
cards in India is around 27 million
 Debit cards as on Dec 2008 is around 120
million
 Credit cards mainly used in 600+ cities
whereas Debit cards are issued everywhere
 Number of POS terminals 400 000 and
poised grow to 3 million !!!!!!
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15. A Case Study
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16. Any Questions ?
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17. Thanking You
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