What you Must Know About POS Machine Charges on POS Transactions
13 December, 2023
Many of you may have been asked to pay extra on card swipes in the early days of POS machines. Then there are others who wouldn't charge anything extra but would deliberately give a discount on cash transactions. Either way, it meant that you were paying extra on card transactions. RBI strictly forbids merchants from charging customers any extra money on POS payments.
Are the POS machine charges mandatory?
POS machines that facilitate credit card, debit card, UPI and other non-cash payments involve a fee. The acquiring bank charges this Monthly Discount Rate from the merchant, often as a percentage of the transaction value paid by the customer. Some merchants try to pass on these POS machine charges to the customer.
The RBI noticed this trend and made the following remark: “such fees are not justifiable and are not permissible as per the bilateral agreement between the acquiring bank and the merchants”. Thus, merchants have no right to claim these expenses from the customers. Banks can terminate their POS-related agreement with the merchant and blacklist the store from future POS linkages.
As a customer, you are within your rights to point out to the merchant that passing on the POS machine charges to the customer is not a fair practice.
Advantages of POS machines and the extra charges involved.
POS devices facilitate non-cash financial transactions at the retail counter, along with a host of other benefits. A retail outlet with a POS system can accept all modes of customer payments, provide a faster checkout experience to the customer, and have a better overview of the inventory position and transaction reports.
For the minimal charges paid by the merchants, they benefit in a number of ways from POS systems.
The invoicing is automated by POS devices, and the transactions are automatically updated in your records.
It leads to faster payments, lower customer waiting time and higher customer handling.
With POS, merchants can manage their orders and vendors better.
Unlike cash payments, merchants don’t need to maintain loose changes and retain large sums of cash in their stores. This makes POS a safer option.
Even if you disregard the advantages of POS for a moment, it is a fact that people don’t go shopping with bundles of currency notes anymore. If your store has a POS device, you can accept payment from such cash-averse customers and increase your in-store sales. If not, you will miss out on a large section of your potential customers. The number of such customers is growing every day. So, accepting POS-based payments work in favors of the merchants despite the charges involved.
Introduction to transaction fee
There are a few transaction-based and periodic charges levied on the merchant by the acquiring bank. For HDFC Bank customers, its POS terminal, POS, is a part of the bank’s SmartHub solutions.
Charges applicable as per the terms of the agreement between the merchant and HDFC Bank include transaction fee, terminal installation, integration charges and rentals
Usage charges on terminals with NIL rental - ₹ 499 per month for monthly volume below ₹ 25,000 and ₹ 199 per month if the volume is below ₹ 1,00,000
Usage charges on terminals with rentals - ₹ 499 per month for monthly volume below ₹ 1,000, ₹ 249 per month for monthly volume between ₹ 1,000 and ₹ 25,000
There is a service charge of ₹ 99 per month, physical MPR of ₹ 99-199 and a batch settlement fee of ₹ 1 per batch.
Besides, there is a POS machine price at the time of installation and also if the terminal needs to be replaced later. In India, POS machine price differs with the category of the device and the issuing entity
While the exact rates and charges may vary from one POS provider to another, this is how POS machine charges work in India.
POS machines are enabling merchants to keep pace with the evolving world of payment technologies. These machines have also helped merchants to welcome more customers by adding new payment acceptance modes to their businesses. Besides, they can use POS systems to document and use the business intelligence captured by these systems with every transaction.
HDFC Bank SmartHub offers competitive POS machine charges in India while offering you the best payment technology with POS.
*Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.