India Market Watch: Imported PoS Machines Exempt from Labelling, Government Reduces Electronic Transfer Charges

Imported PoS Machines Exempt from Mandatory Labelling

The Indian government has decided to exempt mandatory Bureau of Indian Standards (BIS) labelling of imported PoS (Point-of-Sale) machines until March 31, 2017. This exemption has been implemented to expedite shipments and facilitate cashless digital payment particularly after the government’s recent demonetization rule. BIS is the National Standards Body of India that covers product quality certification. As per the earlier rules, imported PoS machines required mandatory BIS certification and standard logo for custom clearance and sales in India.

The Ministry of Finance had proposed the change to MEITY (Ministry of Electronics and Information Technology) to promote a cashless eco-system. As per the new proposal, the government will provide import clearance, if the merchant has a valid registration number issued by BIS for a specific model of PoS machine along with the manufacturer’s details. The merchants are also required to label their products at the port before the consignment is released. Currently India has around 1.5 million PoS machines but according to a new State Bank of India research report, the market requires further 2 million PoS machines to facilitate digitization.

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Government Reduces Electronic Transfer Charges

The government has directed Public Sector Banks (PSBs) to reduce fees for transactions above US$14.76 (Rs 1000) through different digital means until March 31, 2017. As per the directive, PSBs will not charge any fees for Immediate Payment Service (IMPS) and Unified Payments Interface (UPI) transactions in excess of that levied for National Electronic Funds Transfer (NEFT) of over US$14.76 (Rs 1,000). As per the current Reserve Bank of India (RBI) rules, NEFT transfers of up to US$147.61 (Rs. 10,000) attract a fee of US$0.04 (Rs 2.50). Transfers from US$147.61 (Rs 10,000) to US$1476 (Rs 100,000) have a fee of US$0.07 (Rs 5) while those from US$1476 (Rs 100,000) to US$2952 (Rs 200,000), the fee is US$0.22 (Rs 15). Transactions above US$ 2952 (Rs 200,000) will attract a fee of US$0.37 (Rs 25). Service tax will be applicable as an addition to the transaction fees. For USSD (Unstructured Supplementary Service Data) transactions above US$14.75 (Rs 1000), a further discount of US$0.01 (Rs 0.5) is applicable.  

NEFT is a nation-wide payment system facilitating one-to-one funds transfer while IMPS is an instant interbank electronic funds transfer service through mobile phones. The recently implemented UPI system is a money transfer system that allows customers to conduct online and offline payments to merchants without an IFSC code, credit card, net banking or bank wallet detail. USSD is a mobile-based banking system that works in a feature phone with no internet connectivity and therefore preferred for rural users. The RBI has also decided to reduce charges for Merchant Discount Rate (MDR) for debit card transactions up to US$29.49 (Rs 2,000). These current measures are in line with the government’s push for greater adoption of digital payment systems.

RELATED: India Market Watch: Demonetization Boosts Digital Payments Sector

Internet Penetration Still Low

Deloitte shows that around 950 million Indians have no access to the Internet. This is despite low mobile phone data tariff packs and falling smartphone prices. In addition, India has a skill shortfall of 2.3 percent over the global average of 50 percent. While steps have been made, the authorities will have to take further steps to help the population achieve digital literacy.

The skill shortage is particularly acute in the electronic and digital sectors. The study further stated that digital literacy can be helped by institutional training in schools, college and universities, as well as partnerships with global tech leaders and using the workforce trained under Skill India. Private sectors can further help in digital literacy; at present telecom operators are yet to invest in high speed networks in rural areas. Micro, small and medium enterprises (MSMEs) are also unaware of government schemes and incentives that avail benefits.

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