Chinese PoS devices here to stay as cheaper options not on cards

Mumbai: The banking and payments sector may have to continue relying on ‘Made in China’ payment terminals or point of sale (PoS) machines, in the absence of cost-effective domestic or international alternatives.

Amid growing demand for digital payments in India, these swipe machines are the key hardware to process credit and debit card-based transactions at malls and retail stores. Following the government’s directive to reduce dependence on Chinese goods, payments providers are looking at alternative options, but pricing and legacy challenges may prevent any immediate migration, multiple industry sources told ET.

The deployment of these terminals in rural and semi-urban areas is central to the government’s flagship Digital India initiative. The Reserve Bank of India had earmarked ₹250 crore in May to increases deployment of these payment terminals in rural areas, with a special focus on states in the Northeast. Currently, over 95% of POS terminal imports are from China, where the market is dominated by three global manufacturers — US-based Verifone, France-based Ingenico and Hong Kong-based Pax Technologies.

All three companies have manufacturing units in China, with a few in Taiwan and South Korea as well, said industry sources. While Taiwan, South Korea and Vietnam also export these devices, their costs are at least 20-30% higher because of lower economies of scale. “Over 75% of global exports of payment terminals are from China and hence the manufacturers get cheaper deals on raw materials,” said Sanjeev Sandhu, CEO of Pax India.

There is no Made in India POS device. Verifone and Ingenico did not respond to ET’s emails till press time on Wednesday.