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Can’t find an ATM? Withdraw cash from a POS terminal using your debit card

RBI has now allowed withdrawal of cash using debit cards from POS terminals. You won’t have to look for ATMs any more!



If you have a credit or a debit card, you can with draw cash from an ATM (Automated Teller Machine).

You can also use your credit or debit cards at merchant establishments (shops, restaurants, etc.) for payments.

However, till now, you couldn’t use your credit or debit cards at these merchant establishments to withdraw cash. This is going to change now.


The announcement from RBI

The Reserve Bank of India (RBI) has now allowed cash withdrawal from point of sale (POS) terminals using a debit card. (It is still not allowed for credit cards)

(Reference: RBI notification RBI/2009-10/105 DPSS.CO.PD.No. 147/02.14.003/ 2009-10 dated 22nd July 2009)

That is, RBI has now allowed you to withdraw cash from various merchants accepting a debit card.

Such withdrawals would be limited to Rs. 1,000 per day per debit card.

You would be able to withdraw cash even if you do not make any purchase from the shop / merchant establishment. If you make a purchase and also withdraw cash, you would receive a separate receipt for each.

The logic behind the move

As on 31st May 2009, the number of ATMs in India is 44,857. Compared to this, the number of POS terminals in India is 4,70,237.

As you can see, the number of POS terminals accepting credit and debit cards is far higher than the number of ATMs. Therefore, allowing cash withdrawals from such POS terminals would provide a very convenient way for bank account holders to obtain cash.

Converting plastic money into real cash would be a lot easier now!


How would it work?

You must be wondering – how can I withdraw cash from a POS terminal, which is just a machine used for swiping your debit card? Well, the details are yet to be finalized, but here’s the likely scenario.

You would go to a shopkeeper (any merchant), and tell him that you want to withdraw Rs. 700. You would hand over your debit card to him.

He would swipe your card in the POS terminal, and enter the amount. He would also ask you to enter your PIN.

When the terminal authorizes the payment, Rs. 700 would get debited from your debit card (that is, from your bank account) and get credited to the merchant’s account instantaneously. The merchant would hand you Rs. 700 in cash.

Simple, isn’t it?

Would there be any charges?

As mentioned earlier, the details are yet to be finalized. But you can expect to pay a small fee for this convenience.


From when is this facility available?

RBI has given this permission only on 22nd July, 2009. So, it would take some time for the banks to get clearance from RBI. Also, banks would need to change their software and POS terminal software.

But you can expect to start availing this facility in a few months’ time.

Download the RBI notification here

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