IMGCAP(1)]
A plan to enable consumers in India to receive cash back from merchants for debit card purchases has left some banks unsure how the scheme would work. The country's central bank last month ruled that consumers with debit cards issued by Indian financial institutions could withdraw up to 1,000 rupees (US$21 or 15 euros) in cash back when shopping at the point of sale (CardLine Global, 24 July). The ruling comes amid other efforts by the Reserve Bank of India to make it easier for consumers to access cash, including from ATMs in rural areas. The withdrawals at the point of sale will enable more consumers to quickly access cash, an official from the Bank of Baroda tells CardLine Global. "But it remains to be seen how banks will work with the merchants on this and what kind of redressal mechanism is put in place," says the official, who requested anonymity. The official worries that in a dispute, customers might blame the banks, not the merchants. Similar comments come from an official at the alternate channels department of the State Bank of India. The official, who also asked to remain anonymous, says more details are needed about how the scheme would operate. In its ruling, the Reserve Bank did not address fees merchants and banks could charge for the service. Prathima Rajan, an India-based analyst with United States-based research firm Celent, tells CardLine Global the recent ruling will challenge banks to properly maintain POS terminals. But "the biggest question here comes from the merchants' point of view" she adds. "How many merchants would be willing to be part of this [service], and [what] kind of commission will they get for offering such a facility?"
