project report: boi, ban of india

7/28/2019 Project Report: BOI, Ban of India

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PROJECT REPORT

POS & Cash pick-up

MARKET SURVEY

SUBMITTED IN PARTIAL FULFILMENT OF MBA(FINANCE) PROGRAMME OF UNIVERSITY OF

LUCKNOW

2011-13

Submitted By:-

Vidushi Mehrotra,MBA-Finance, SemesterIII,

Department of Business Adminstration,

University of Lucknow.


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DECLARATION

I hereby declare that the project report titled POS & Cash

Pick-Up, Market Survey has been undertaken as a part of

the corporate strategy and new business development of StateBank of India. This work has been made successful under the

able guidance of Mr Rohit Tandon, AGM (SMEBU-1), State

Bank of India, Local Head Office Lucknow. The results and

outcomes of the report are totally based on my understanding

of the topic and based on the facts and figures emanated out of

the survey of varied markets and the analysis of questionnaires

collected.

Date: Name of the studentJuly 6th, 2012

Vishva Vidushi Mehrotra

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ACKNOWLEDGEMENT

It was an opportunity to conduct study, on behalf of State Bank

of India and to develop an understanding of Finance as a part

and parcel of this project. I would like to express my sinceregratitude and regards to Mr Rohit Tandon, Assistant General

Manager, SMEBU-1, LHO Lucknow who supported me in

completing this project.

I am also grateful to Mrs Suman Gupta (Deputy Manager)

and all the other staff members of SMEBU-1 for their guidance

and support during the term of my training for the completion

of this project report and for a better understanding ofCorporate Strategy and business development.

I would also like to thank my alma mater University of

Lucknow for providing me this opportunity to put into

practice, the theoretical knowledge from this programme.

I extend my gratitudes towards my family and friends, who

have helped me throughout the tenure and my apologies to

those, whom I have inadvertently omitted.

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TABLE OF CONTENTS

S.

No.

Particulars Page no

1. Executive Summary 7

2. Introduction 9

3. Scope of the Study 12

4. Literature Review POS 13

Cash Pick-up 14

5. SBI-History 18

6. Research Methodology 19

7. Results and Findings 21

8. Limitations and Caveats 31

9. Conclusion and Recommendations 32

10. ExhibitsQuestionnaire 33

Statistical Output 36

List of Shops 37

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LIST OF TABLES

Serial

no.

Particulars Page

no.

A1. Companys Snapshot 16

B1. Have you ever used a POS machine? 21

B2. Duration of POS usage 22

B3. Percentage of banks issuing POS 23B4. Bank charges per transactions through

POS

24

B5. Percentage of cards swapped through POS 25

B6. Have you ever faced any difficulty in POS

usage?

26

B7. Percentage of sales made through cash 27

B8. Have you ever used cash pick-up facility? 28

B9. Use of cash pick-up services of differentbanks?

29

B10. Have you ever faced any difficulty in cash

pick-up?

30

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LIST OF GRAPHS

Serial

No.

Particulars Page No.

1. Have you ever used a POS machine? 21

2. Duration of POS usage 22

3. Percentage of banks issuing POS 234. Bank charges per transactions through

POS

24

5. Percentage of cards swapped through

POS

25

6. Have you ever faced any difficulty in

POS usage?

26

7. Percentage of sales made through cash 27

8. Have you ever used cash pick-upfacility?

28

9. Use of cash pick-up services of

different banks?

29

10. Have you ever faced any difficulty in

cash pick-up?

30

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EXECUTIVE SUMMARY

Banking is a Service Industry dealing with financials needs of individuals and

Industry Majors. In todays competitive scenario Customer Service is the key to thesuccess of every service provider. As a measure of improving its Market presence

and reach, and to improve its brand image and performance banks are coming up

with newer products taking the leverage of the advent of Technology. In thisregard banks have come up with Point of Sale terminals and cash pick up facility to

take care of the day to day needs of the traders. Further, now a days as the focus of

individuals have shifted towards cashless shopping and purchases most of the banks

are offering credit cards, debit cards and master cards to its customers.

Considering the ever increasing need of these traders the State Bank of India

has also entered this market. In order to tap this Merchant Acquiring Business, POSMachines and Cash Pick-Up is made available to traders as a total solution to them.

Therefore with this objective, we attempt to study the present market scenario of

POS and cash pick-up services and the details of related services provided byvarious other banks. In this pursuant we conducted survey of major markets of

Lucknow on sample basis with the help of a comprehensive questionnaire.

Our findings reveal that Axis bank is the major player in these two productsfollowed by HDFC bank. The public sector banks are lagging far behind in offering

these services and needs to do a lot to promote these products in the market. Further,

there still exists a lot of untapped potential in the market which may be focusedupon by bank for increasing its market share. During this survey we have realized

that most of the sales were made in cash and the majority of cards swapped through

the terminal were those of SBI. SBI can explore this opportunity as its rates arecompetitive in the market and major card usage is that of SBI cards.

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OTHER FINDINGS

A study by Edgar, Dunn & Company (EDC) and India CardsCouncil (ICC) has revealed that unlike in UK and Australiawhere 90 per cent cards are active, there are only 56 percent active debit cards in India.

There is a very low level of debit card usage at POS (Point ofSale) compared to other countries. For example: 26 per centof active debit cards used at POS versus 86 per cent in the

USA and 45 per cent in Australia. The very low costs associated with new cardholder

acquisition may indicate that insufficient resources are beingapplied to checking credit worthiness of applicants.

Debit cards are primarily used for ATM withdrawals, tosupport cash-based transactions.

In the credit card segment too, India only has 56 per centactive cards against 80 per cent in Australia and 75 per centin Singapore.

Credit losses in India also are relatively high because of low

level of transaction volume and value across the card base. A high level of inactive cards in the portfolio can indicate

that customers are holding credit cards from multiple banks.

Card base of public sector banks expanded 7.4 per centyear-on-year to 3.09 million at the end of April, while creditcards with private and foreign banks together declined 1.5per cent year-on-year to 14.7 million.

At the end of April, SBI had a card base of 2.25 million, oreight per cent more compared to a year earlier. The bankoffers credit cards through SBI Cards, its venture with GECapital.

SBI Cards is currently the fourth-largest credit card issuer inthe country and the largest among public sector banks. Thebank aims to source one million cards annually in two years.

PNB expanded its credit card base the fastest among largebanks. Cards with the bank rose 27 per cent to 1,03,712 atthe end of April.

Some private sector banks, however, have defied trends. Forinstance, HDFC Bank, which accounts for the largest credit

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card base (5.65 million), added 5,50,000 cards, expanding itsbase by about 11 per cent. In the past year, the bankannounced a slew of initiatives, including the no-limit card'Infinia' card, to augment its card base.

Some foreign and private lenders took the inorganic route to

enter into, or expand, credit cards businesses. IndusInd Bankacquired Deutsche Bank's card portfolio to enter the market,while Standard Chartered Bank bought Barclays' cardbusiness in India to expand its portfolio.

However, with major players like ICICI Bank and HSBCrefraining from growing their card business, the aggregatemarket share of private and foreign lenders in this segmentfailed to rise.

INTRODUCTION

POS (Point of Sale terminal)

POS (Point of Sale terminal) refers to a terminal on which aDebit/Credit or Prepaid card is swiped (in a card presentenvironment).This involves an issuer and an acquirer. Issuer refersto the Bank/Card Company, which has issued debit, credit orprepaid cards to customers. And acquirerrefers to the Bank whichhas put up POS terminals at various merchant establishments tofacilitate genuine card holders (customers) making payments tomerchants by swiping cards.

Prizm (i.e. M/s. Prizm Payment Services Pvt. Ltd.) is our currentTechnology Service Providers, who carry on services viz.installation, maintenance of POS terminals, handling transactionsrouted through SBI POS, sending e-statements to merchants,attending to Merchants calls though Help desk etc. Terminals arecurrently maintained by Prizm without any additional cost toMerchants. Merchants can lodge their complaints to Prizm on theirregional help-desk numbers.Once the proposal for installation of aPOS terminal is approved by the MAB and communicated to Prizmand the infrastructure at the Merchant Establishment is ready, the

terminal is installed by Prizm within 10 to 15 days depending uponthe location of the merchant.

Type of Terminal: There are four types of terminals viz. normalPSTN, CDMA and GPRS. The details of terminals are as under:

PSTN: Works over normal telephone land line thus having anadvantage over GPRS and CDMA machines which are dependent

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on signal strength. The merchant bears the communication costsand the mobility is dependent on the length of telephone wire.

CDMA: Works over CDMA technology using a modem. Beingindependent of telephone lines it has the advantage of better

mobility and the merchant also saves on the cost ofcommunication. However, the merchant needs to pay Rs. 200/- permonth (Rs.2400/- upfront for the year) towards cost of SIM inaddition to the normal MDR.

GPRS: The terminal works on the mobile networks and isindependent of a power source, thus providing maximum mobilityand no communication cost to the merchant. However, themerchant needs to pay Rs. 1000/- (Rs. 6000/- upfront for 6months) towards the cost of SIM etc. in addition to normal MDR.

Ethernet: POS terminal works on Internet protocol and can beconnected with a LAN cable. Currently this type of terminal isbeing used for our Green Channel Counter (GCC) transactions. Weneed to build a private network with the merchant and hence thisis not feasible for stand-alone merchants.

Manual (deferred or batch) processing means the order is receivedwith the credit card number in person, through a phone call, fax, oronline form, and given to the merchant who then processes theorder manually, either by using a physical point-of-sale (POS)

terminal to swipe the card or keying it in using a virtual software-based terminal. Weve all seen the POS terminal at our localgrocery store or retail outlet. These terminals work with phonelines, but can also be operated using wireless technologies. Avirtual software-based terminal is installed on a PC with a modemand available through any web browser. Credit card information isadded to an online form and then submitted. The information iseither stored on the merchants server or on the server of a serviceprovider, and securely protected using SSL or other securityprograms.

There are two phases involved in manual processing authorization and settlement.

Authorization:

Authorization is a process whereby the merchant verifies the cardbeing presented by the customer is not a stolen card and that ithas enough credit available to complete the purchase. The process

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begins when the merchant receives the credit card number, whichis obtained by swiping the card through the POS terminal or bykeying the card number into the virtual terminal.

If the card is a Visa card or MasterCard, the card data is

transferred to the merchants (acquiring) bank, which channels theinformation to the credit card company. The credit card companyrequests authorization from the cardholder's (issuing) bank toensure the card is actually owned by the cardholder. Onceauthorized, approval is sent from the issuing bank to the creditcard company and back to the acquiring bank and merchant. Thedata that passes through to each player in the authorizationprocess is encrypted using the latest SSL technology.

Settlement:

Settlement is the process merchants follow to ensure they receivepayment for products and services sold. At the end of the day, themerchant will transmit the receipts from sales for that day andsend them electronically from the card terminal in a batch. Theacquiring and issuing banks then communicate with the cardcompanies in the manner outlined above in the authorizationprocess.

CASH Pick-Up

Cash Pick ups are the in bound part of the Cash logistics

operations. The service includes picking-up of cash from thecustomer premises, depositing the same in the bank, reconciliationand reporting.

In addition to all the advantages available with the Cash deliverymodel, cash pick up services provide following additionaladvantages:

Quick receipt of receivables for network operators therebyhelping in managing cash flows and reducing dead cash atother offices

Consolidated cash receipt at Bank branches instead of

individual pick ups thereby increasing productivity of Bankcash staff

Disposal of low quality cash in other channels therebyimproving cash balance quality and utilization

However, at the end of the day all cash is collated and processedtogether and Bank gets a single statement showing client wisereceipts and other details. To ensure full security of these

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operations, in addition to the security measures listed in deliverysection, special processes are followed to ensure that theinformation does not leak out hereby exposing the client.To ensure that the client is absolutely comfortable in handing overthe cash, elaborate arrangements for employee identification, pick

up authentication and audit trail are made.

SCOPE OF THE STUDY

Merchant Acquiring Business (MAB Background)

MAB is primarily referred to as the mechanism of facilitatingpayment for goods and services purchased through medium of acard. The Merchant Acquiring Business emphasizes on the use ofcards in a typical retail purchase transaction. The transactioninvolves card holders and their Banks (Issuer) on the one side,

Merchants and their Banks on the other (Acquirer) and a paymentnetwork (Visa/ MasterCard) in the middle that co-ordinates the flowof information and money underlying the transaction. Themerchant services industry is shaped by the relationships betweenmerchants and acquirers. The Merchant Acquirer is defined as themember financial institution responsible for its merchant-customers transaction and for maintaining relationship with thepayment network.

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The scope for Merchant Acquiring Business has substantiallyincreased due to a thrust on electronic receipts and payments bygovernment, hospitals, railways, airlines, educational institutionsetc. It promotes a cashless payment environment

which is beneficial to all stakeholders. To carry on this task, theBank has formed a Wholly Owned Subsidiary (WOS) in the name ofSBI Payment Services (P) Ltd. (SBIPSPL). SBIPSPL was incorporatedon the 12th February, 2010. Till it starts its operations, the Bankhas started doing this business by deploying POS terminals, onrequest received from Circles.

LITERATURE REVIEW

The Merchant Acquiring Business comes with various advantagesfor the stake holders:For the card holders:

No need to carry cash, which is risky.

Customers can maintain higher balances in the account,

resulting in higher interest income on deposits. Saves time and also money for transportation in visiting

bank Branches / ATMs to withdraw money and then to spendthe same at merchant outlets, who again have to deposit thesame in Banks.

The time saved results in lower cost and higher productivityas time saved can be gainfully utilized.

Can avail promotional benefits on offers.

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For the Merchant:

Cash handling is avoided, pure cashiers can be dispensedwith in large stores.

The risk of forged notes is eliminated.

The customers have tendency to go in for higher purchaseswhile using the card as there is no restriction on account oflimited carrying notes in the purses.

The customer stickiness to merchant increases due to thefacility.

For the Bank:

The transaction costs at Branches or ATMs is avoided whencards are swiped at POS machines.

Increase in CASA deposits due to non withdrawal in bulk fromATMs prior to shopping.

The flight of business to other banks due to not offering thefacility is arrested.

The card base is leveraged to facilitate customerconvenience and thus facilitate stickiness.

CASA improves also because of the settlement account ofthe shopkeeper getting funded.

POS Applications

As competition between merchants intensifies, so does theevolution of payment options to attract new customers and retainexisting ones. The changing e-payment landscape has created aneed for a versatile, multi-purpose device that can support the fullspectrum of applications needed by the competitive retailenvironment.

What was initially a single purpose device, the POS terminal isbecoming a more sophisticated tool that supports smart cards,loyalty programs, advertising and the operation of company legacysystems.

P.O.S Card Systems has the resources to provide electronicmerchant services to every industry ie. Retail, Restaurant,

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Hospitality, Mail/Telephone Order, e-commerce,Business to Business and Mobile merchants.

CASH PICK-UpCASH PICK-Up

I. The cash pickup agency would get in touch with the localbusiness offices and decide on a mutually comfortable time forcash pickup.

II. Customers authorised representative should fill in the depositslip details, sign it (by an authorised person), and keep the depositslips ready by the time of arrival of officials of the cash pickupagency. Customer shall keep the entire cash denomination-wiseduly counted in packets of 100,

III. Packed with note slips along with duly filled up deposit slips.The deposit slips to be used will be the special deposit slipsprovided by SBI Bank for this purpose and the number of notes andthe total amount in such packets shall be mentioned on thedeposit slips.

IV. Customer shall separately pack loose currency with the noteslips, stamp, signature and date. The number of notes in suchpackets shall be mentioned on the note slips.

V. Customer should use the special deposit slips (Quadruplicate) asprovided by SBI Bank for deposit of cash through the cash pick-upservices of SBI Bank. All the four copies of the deposit slip/challanwill be signed by customer and the agency's authorised person.The agency will provide the first copy against receipt of cash andhandover the other three copies of the deposit challan to the bankalong with cash. The bank retains the 2nd copy and acknowledgesreceipt of cash on the 3rd and 4th copies of the deposit challan.The agency retains the 4th copy for its records and sends the thirdbank acknowledged copy by local courier the next working day tocustomer or handover the same to customer in three workingdays. It is customers responsibility to collect the bankacknowledged copy of the cash deposit challan (3rd copy) from thecash agency

VI. The cash pickup agency will provide a Hidden CodeIdentification Slip ( 3 ply ) booklet (Client's Copy) to customeron a monthly basis and a hidden random number, which can be

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State Bank of India

Type Public

Traded as NSE: SBIN

BSE: 500112

LSE: SBID

BSE SENSEX Constituent

Industry Banking, Financial services

Founded 1 July 1955

Headquarte

rs

Mumbai, Maharashtra, India

Area served Worldwide

Key people Pratip Chaudhuri

(Chairman)

Products Credit cards, Consumer

banking, corporate

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http://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Ticker_symbolhttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=SBIN&section=7http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/scripsearch/scrips.aspx?myScrip=500112http://en.wikipedia.org/wiki/London_Stock_Exchangehttp://www.londonstockexchange.com/exchange/prices-and-news/stocks/prices-search/stock-prices-search.html?nameCode=SBIDhttp://en.wikipedia.org/wiki/BSE_SENSEXhttp://en.wikipedia.org/wiki/Financial_serviceshttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Pratip_Chaudhurihttp://en.wikipedia.org/wiki/Retail_bankinghttp://en.wikipedia.org/wiki/Retail_bankinghttp://en.wikipedia.org/wiki/Commercial_bankhttp://en.wikipedia.org/wiki/Types_of_business_entityhttp://en.wikipedia.org/wiki/Ticker_symbolhttp://en.wikipedia.org/wiki/National_Stock_Exchange_of_Indiahttp://www.nseindia.com/marketinfo/companyinfo/companysearch.jsp?cons=SBIN&section=7http://en.wikipedia.org/wiki/Bombay_Stock_Exchangehttp://www.bseindia.com/scripsearch/scrips.aspx?myScrip=500112http://en.wikipedia.org/wiki/London_Stock_Exchangehttp://www.londonstockexchange.com/exchange/prices-and-news/stocks/prices-search/stock-prices-search.html?nameCode=SBIDhttp://en.wikipedia.org/wiki/BSE_SENSEXhttp://en.wikipedia.org/wiki/Financial_serviceshttp://en.wikipedia.org/wiki/Mumbaihttp://en.wikipedia.org/wiki/Pratip_Chaudhurihttp://en.wikipedia.org/wiki/Retail_bankinghttp://en.wikipedia.org/wiki/Retail_bankinghttp://en.wikipedia.org/wiki/Commercial_bank


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banking,finance and

insurance,investment

banking, mortgage

loans, private

banking, wealth

management

Revenue US$32.44 billion (2011)

Profit US$2.34 billion (2011)

Total assets US$369.56 billion (2011)

Total equity US$18.71 billion (2011)

Owner(s) Government of India

Employees 222,933 (2011)

Website www.statebankofindia.com

COMPANYs HISTORY STATE BANK OFINDIA

The evolution of State Bank of India can be traced back to the firstdecade of the 19th century. It began with the establishment of theBank of Calcutta in Calcutta, on 2 June 1806. The bank was

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http://en.wikipedia.org/wiki/Commercial_bankhttp://en.wikipedia.org/wiki/Financial_serviceshttp://en.wikipedia.org/wiki/Financial_serviceshttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Mortgage_loanhttp://en.wikipedia.org/wiki/Mortgage_loanhttp://en.wikipedia.org/wiki/Private_bankinghttp://en.wikipedia.org/wiki/Private_bankinghttp://en.wikipedia.org/wiki/Wealth_managementhttp://en.wikipedia.org/wiki/Wealth_managementhttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Equity_(finance)http://en.wikipedia.org/wiki/Government_of_Indiahttp://www.statebankofindia.com/http://en.wikipedia.org/wiki/Commercial_bankhttp://en.wikipedia.org/wiki/Commercial_bankhttp://en.wikipedia.org/wiki/Financial_serviceshttp://en.wikipedia.org/wiki/Financial_serviceshttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Investment_bankinghttp://en.wikipedia.org/wiki/Mortgage_loanhttp://en.wikipedia.org/wiki/Mortgage_loanhttp://en.wikipedia.org/wiki/Private_bankinghttp://en.wikipedia.org/wiki/Private_bankinghttp://en.wikipedia.org/wiki/Wealth_managementhttp://en.wikipedia.org/wiki/Wealth_managementhttp://en.wikipedia.org/wiki/Net_incomehttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Equity_(finance)http://en.wikipedia.org/wiki/Government_of_Indiahttp://www.statebankofindia.com/


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redesigned as the Bank of Bengal, three years later, on 2 January1809. It was the first ever joint-stock bank of the British India,established under the sponsorship of the Government of Bengal.Subsequently, the Bank of Bombay (established on 15 April 1840)and the Bank of Madras (established on 1 July 1843) followed the

Bank of Bengal. These three banks dominated the modern bankingscenario in India, until when they were amalgamated to form theImperial Bank of India, on 27 January 1921.

An important turning point in the history of State Bank of India isthe launch of the first Five Year Plan of independent India, in 1951.The Plan aimed at serving the Indian economy in general and therural sector of the country, in particular. Until the Plan, thecommercial banks of the country, including the Imperial Bank ofIndia, confined their services to the urban sector. Moreover, theywere not equipped to respond to the growing needs of the

economic revival taking shape in the rural areas of the country.Therefore, in order to serve the economy as a whole and ruralsector in particular, the All India Rural Credit Survey Committeerecommended the formation of a state-partnered and state-sponsored bank. This resulted in making the State Bank of Indiamore powerful, because as much as a quarter of the resources ofthe Indian banking system were controlled directly by the State.Later on, the State Bank of India (Subsidiary Banks) Act waspassed in 1959.

SBI is a regional banking behemoth and is one of the largest

financial institutions in the world. It has a market share amongIndian commercial banks of about 20% in deposits and loans. The

State Bank of India is the 29th most reputed company in the world

according to Forbes. Also, SBI is the only bank featured in the

coveted "top 10 brands of India" list in an annual survey conducted

by Brand Finance and The Economic Times in 2010.

The State Bank of India is the largest of the Big Four banks of

India, along with ICICI, PNB and HDFCits main competitors.

Instead of serving as mere repositories of the community's savingsand lending to creditworthy parties, the State Bank of Indiacatered to the needs of the customers, by banking purposefully.The bank served the heterogeneous financial needs of the plannedeconomic development.

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RESEARCH METHODOLOGY

Problem Definition

The purpose of the study is to assess the depth of the market

where other banks are issuing POS terminals and are providingcash pick-up facilities to the market. During this phase of marketresearch, we tried to figure out the reason behind the absence ofSBIS POS terminal.

Approach Development

In order to deal effectively with this problem we visited variousshops in Lucknow and our interaction with those dealers, formedthe basis of our study. Keeping in mind the information needed, we

prepared questionnaire to understand the prevailing condition ofmerchant acquiring business in a card present environment. In thisprocess, our discussion with the dealers helped us to understandthe pros and cons of using such facilities.

Research DesignResearch design specifies the details of the procedures necessaryfor obtaining information needed to structure or solve the researchproblem. Research design adopted was exploratory in nature,

wherein we identified relevant courses of action and gainedadditional insights before formulating an approach to the problem.The findings are tentative and can be used to inputs to furtherresearch. Our research involves comparative scaling techniques,with which we are able to rank the performance of various publicsector and private banks.

Data collection

Initially secondary data in form of banks circulars, companyswebsite and various other official documents were collected. Thishelped us in formulating an appropriate research design andinterpreting the primary data more insightfully. Our studyconcentrates basically on the primary sources which includes thesales force and the merchants possessing POS terminals and usingcash pick-up services. The concerned departments and theorganizations have been approach to get insights and relevant

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statistics on this topic. The field survey has been conducted invarious showrooms of Hazratganj and Sahara Ganj mall by askingquestions and recording answers by means of a standardizedquestionnaire. We have adopted a simple random samplingtechnique and our sample size is 100.

Data preparation and analysis

Our data preparation process is guided by the preliminary plan ofdata analysis that was formulated in the research design phase.The questionnaire was designed keeping in view the reluctance ofthe dealers to easily part with the information and personalexperiences. The questions were both open ended and closeended. While our field work was still underway, we edited ourquestionnaire by reconstructing such questions which required thedealers to disclose their average sales. We were required to clean

the data by treating the missing responses because many dealerswere not aware of the POS rates and cash pick-up charges due tothe centralized procedures of the companies.The questionnaire were analyzed to find out the duration of usage,type of POS terminals, initial cost of POS installation, charges andother facilities like cash pick-up and concession in pricing.

OBSERVATIONS

Owing to the leadership of the private players, the merchantacquiring business is immensely dominated by Axis bank, HDFC

and agencies like CMS. Our observation has revealed that dealershave been using the POS terminals for a long time. Most of theshopkeepers use POS through PSTN and majority of them operatethrough Airtel landline. Another information, that surfaced was thatthe initial cost of POS installation and instrument was completelyborne by the bank. During this survey we have realized that mostof the sales were made in cash and the majority of cards swappedthrough the terminal were those of SBI.

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RESULTS AND FINDINGS

The data obtained from the questionnaire has helped us to derivesuch information.TABLE - B1

Have you ever used a POSmachine?

yes 71%

No 20%

not aware 9%

FIGURE-1

During the research it has been observed that most of the dealersused POS machines whereas a few of them were not aware of it.Out of the hundred shops that we surveyed 71% used POSmachines whereas 9% were not aware of it and 20% made salesonly through cash.

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TABLE-B2

Duration of POS usage

1 year 22

1-3 years 28

3 years & above 50

FIGURE-2

Most of the respondents agreed to having used the POS machinesfor a long time. 50% of the shopkeepers have been using themachines for more than three years, 28% for less than three yearsand 22% for about a year.

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TABLE-B3

% of banks issuing POS

HSBC 1

Indus 2

Yes Bank 2

Corporation Bank 2

PNB 2

SBI 2

Union Bank 2

Citi Bank 3

IDBI 4

ICICI 8

HDFC 27

AXIS 45

FIGURE-3

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The survey has revealed that most of the dealers use POSterminals of Axis bank(45%) followed by HDFC(27%) andICICI(8%). During the survey we found that the public sectorsbanks like PNB and SBI had a negligible market share of 2% each.

TABLE-B4

Bank charges for the transaction through POS

Less than 1.2 10

1.2-1.4 31

1.4 & above 35

Not Aware 24

FIGURE-4

During the survey, we found that most of the banks charged 1.4%and above from the dealers for the per transactions usage of thePOS terminals. 31% of the respondents agreed to having paidsomewhere between 1.2%-1.4% to their respective banks. A smallrange of respondents said that they paid less than 1.2% whereas24% of the respondents were not aware of the bank charges.

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TABLE-B5

% of cards swapped through the pos terminal

SBI 40

Other Nationalized Banks 10

Private banks 30

Others 20

The survey revealed that most of the customers possessed debitcards of SBI which were being swapped through the POS terminals,followed by the private banks(Axis bank, HDFC, IDBI, etc). The

other nationalised banks revealed a low share of 10% in the cardsthat were being swapped through the POS terminals.

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TABLE-B6

Have you found any difficulty in POS usage?

Yes 6%

No 84%

Missing 6%

Out of a hundred respondents whom we surveyed, a majority of

84% had never faced any difficulty while using a POS machines,whereas 6% had faced a problem of cards swapping fortransactions above Rs 5000. And 6% of the responses weremissing.

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TABLE-B7

% of sales made through Cash

20% -40% 6%40% -

60% 43%60% &above 51%

During the survey we found that a majority of sales (51%) wasmade in cash. 43% of the dealers made cash sales of less than60% whereas 6% of the respondents made a cash sale of 20-40%.

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TABLE-B8

Have you ever used cash pick-up facility?

Yes 35%

No 42%not aware 23%

During the survey it was revealed that majority of the dealers(42%) did not use cash pick-up facilities and they themselvesdeposited cash in the bank. 35% of the respondents used cashpick-up facilities of different banks whereas 23% of theshopkeepers were not aware of this facility.

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TABLE-B9

Use of cash pick- up services of different banks

Axis Bank 50%HDFC 12%

HSBC 9%

Yes Bank 9%

Others 20%(Others include-- Taru Visha, WSD, Federal, Induslnd, Kotak & Securitan)

Out of the hundred shops which we surveyed, Axis bank emergedas the market leader in providing cash pick-up services through an

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agency called CMS. HDFC bank has a market share of 12%followed by HSBC and Yes bank at 9%. The other banks andagencies like Taru Visha, WSD, Federal, Induslnd, Kotak &Securitan were found to make a contribution of 20% in providingcash pick-up services.

Table-B10

Have you ever faced any difficulty in cash pick-up?

no 89%yes 2%

missing 9%

During our survey, we found that 89% of the respondents hadnever faced any difficulty in their cash pick-up by the banks. 2% ofthe respondents were not satisfied with this facility owing to thetime constraints whereas 9% of the respondents were not willingto disclose any information.

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LIMITATIONS AND CAVEATS

While coming in contact with the merchants, such problems werehighlighted.

Lack of adequate knowledge among theshopkeepers/retailers.

Lack of cooperation by the shopkeepers/retailers.

Clash of timings with the business hours.

Indifferent behavior of the shopkeepers towards us.

Unwillingness on part of the dealers to disclose anyinformation.

The survey was confined to the regions lying in the vicinity ofLucknow.

Direct tie-ups of the companies with the banks proved to bea huge constraint, since the respondents were unaware ofthe bank charges.

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CONCLUSION AND RECOMMENDATIONS

Our survey has revealed that Axis bank is the market leader bothin terms of point of sale and cash pick-up services. As a matter of

fact, we are nowhere in providing such corporate facilities to themerchants. In fact it is not only SBI but all the public sector bankshave a negligible market share in this sector. The reason can bethe late entry of the public sector banks in this business.

With the merchant acquiring business gaining prominence, theState Bank of India has to tap the potential in the market of pointof sale and cash pick-up services. Realizing the immense potentialin this area we need to work harder on our products, our marketingstrategies, and most importantly developing a competitive edgeover the other banks operating in the market. With so many other

market entrants, SBI needs to capture the market by providing itsproducts at marginal rates and such other value added services.

Though SBIs share in POS business is only 2%, it can increase itsexposure to many folds by leveraging the available cost benefit oflower MDR rates, focusing more on these products. From thedealers covered in the survey, the major issue that came up waslack of awareness about the existence of such terminals andservices of SBI. In such case the bank should take the initiative topromote the services to its existing account holder merchants aswell as to other bank account holders. For a quick start up, effortsshould be made to depute officers for focused marketing of theseproducts to the dealers and a toll free helpline should beintroduced where the merchants could clear their queries on POSusage and quick cash pick- up. These numbers should be properlydisplayed at major locations via hoardings etc.

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With the increase in card base, the merchant acquiring businesshas more scope of expanding and the growth in this sector isinevitable if the services are provided in a better and organizedmanner.

EXHIBITS

QUESTIONNAIRE

Name of the unit:

Activity:Key Person:

Address:

Contact No:

1. Do you possess a POS terminal?If yes, Name of the bank/s?______________

2. Since how long have you been using POS?

A) 1yearB) 1--3 years

C) More than 3 years

3. What type of POS terminal do you use?

a) PSTNb) CDMA

c) GPRS

d) ETHERNET

4. Who bears the initial cost of POS installation, POS machine, etc?

a) Bank

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b) Borrower

How much?

5. What are the other facilities; you are availing from the above Bank?

a) Deposit a/cb) FDs & RDs

c) Loan a/c

d) Others,

6. What are the charges for the POS terminal, being charged by your bank?a) Fixed charge b) Variable charge c) Combined charge

d)Other Charges, if any1) 200-400 1)0.20-1.2 1)500-1000

(Annual Maintenance2) 400-800 2)1.2-1.4 2)1000-1500

Charges, etc)_______

3) 800 & above 3)1.4 & above 3)1500 & above

7. What are the added services, which you receive with your POS terminal?

a) Cash pick-up

b) Concessions in pricingc) Others , please specify

8. What are the average sales made through POS terminal per day?

a) Less than 1 Lac

b) 1 Lac3 Lacc) 3lacs & above

9. What is the sales percentage through cash?A) 20%-40%

B) 40%-60%

C) 60% & above

10. At what percentage the following cards are swapped through your POSterminal?

A) SBI

B) Other Nationalized Banks

C) ICICI/Axis Bank /HDFC

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D) Others

11. Do you face any difficulty in POS usage, Reconciliation, etc?A) No

B) Yes, please specify____________

12. Are you aware of the cash pick-up facility being provided by the banks and

its benefits?

a) Yesb) No

13. If yes, which banks pick-up services, you are using?

a) PNBb) ICICI

c) SBI

d) Others, please specify__________________

14. Cash pick-up is through whom?

a) Bank officerb) Outside vendor

15. What are the other facilities you get with your cash pick-up?

16. What is the time lag between cash pick-up and receipt of credit in the

account?

a) Same day

b) Next day

c) More than 1 day

17. What is the average cash pick-up per day?

a) Upto 2 lacsb) 2-5 lacs

c) 6-10 lacs

d) More than 10 lacs

18. What is the fee charged by your bank for cash collection per month?

a) Upto 1500

b) 1500-3000c) 3000-4500

d) More than 4500

19. Does your bank provide the facilities of cash pick-up beyond banking hours

or on holidays & Sundays?

a) No

b) If yes, what are the extra charges?

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20. Are you comfortable in giving cash at a place other than bank premises?

a) Yesb) No

21. Do you face any difficulties in cash deposits through cash pick-up ?(cash reconciliation, cash shortage, fake notes,etc)

a) No

b) Yes, please specify__________________

22. What is the period of settlement cycle?

a) Same day

b) Next day

THANKS FOR YOUR COOPERATION.

STATISTICAL OUTPUT

The study reveals the following output:-

India has total card base of 230 million (212 million debit &18 million credit) as on March 2010.

SBI has issued over 85 million debit cards (market share >40%). By increasing the card usage, the customers at branchcounters and ATMs may be shifted directly to Merchant

Establishments. This will save substantial cost to the Bank.

More than 60% of the sales in the small and mediumenterprises are made through cash

Axis Bankhas emerged as the market leader in providingPOS terminals, with 45% market share followed by HDFC27%

More than 50% of merchants have been using the POSterminals for about 3 years and above.

Majority of the bank charges for the transactions throughPOS terminals are 1.40% and above.

Approximately 40% of the cards swapped through the POSare of SBI.

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50% of the respondents use cash pickup services of AxisBank.

LISTS OF SHOPS

Name of the unit: FastrackActivity: WatchesKey person: Mr. Mansoob AhmadAddress: Sahara ganj

Contact no: 0522-4004669

Name of the unit: BibaActivity: Suits and SareesKey person: Mr. Atah Waris KhanAddress: Shop no 116, Sahara ganjContact no: 0522-4009415/16

Name of the unit: AddidasActivity: Apparel Store

Key person: Kiran SinghAddress: Sahara ganjContact no: 0522-4008268

Name of the unit: PassportActivity: Apparel StoreKey person: Mr FaizAddress: Sahara ganj

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Contact no: 0522-4003766

Name of the unit: BlackberryActivity: Formal wearKey person: Mr Raj Kumar SonkarAddress: Sahara ganj

Contact no: 0522-3914480

Name of the unit: BataActivity: FootwearKey person: Mrs Radha KantAddress: Sahara ganjContact no: 0522-4103665

Name of the unit: Moda

Activity: Apparel storeKey person: Mr Hisham KhanAddress: Shop no 121, Sahara ganjContact no: 9936150549

Name of the unit: AllActivity: Apparel storeKey person: Mr Jai Prakash MishraAddress: Shop no122, Sahara ganjContact no: 0522-3022455

Name of the unit: LibertyActivity: FootwearKey person: Mr Kaushal TiwariAddress: Shop no 123, Sahara ganjContact no: 0522-3237098

Name of the unit: American TouristerActivity: LuggageKey person: Mrs ChandaAddress: Shop no 124, Sahara ganjContact no: 0522-3069477

Name of the unit: Pepe jeansActivity: Apparels storeKey person: Mr FaizAddress: Shop no 19, Sahara ganjContact no:

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Name of the unit: RoxtonActivity: Apparel StoreKey person: Mr. PrashantAddress: Sahara Ganj

Contact no: 0522 -4021887

Name of the unit: DenizenActivity: Jeans & ShirtsKey person: Mr. Vimal GuptaAddress: Sahara GanjContact no: 9338303086

Name of the unit: Walk InActivity: Footwear

Key person: Mr.ShaheerAddress: Sahara GanjContact no: 0522-4000449

Name of the unit: TouristerActivity: FootwearKey person: Mr.RicharAddress: Sahara GanjContact no: 0522-4043147

Name of the unit: Half TicketActivity: ToysKey person: Mr. Mohit GargAddress: Sahara GanjContact no: 0522-2626617

Name of the unit: Narangs ChikanActivity: Apparel StoreKey person: Mrs.Gurbeen SinghAddress: Sahara GanjContact no: 0522-3019249

Name of the unit: Club AvisActivity: Apparel StoreKey person: Mrs Sukirti GuptaAddress: Sahara GanjContact no: 8808080086

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Name of the unit: Digital ZoneActivity: CameraKey person: Mr. Surendra YadavAddress: Sahara GanjContact no: 7800591030

Name of the unit: Cat MossActivity: Apparel StoreKey person: Miss. AnjaliAddress: Sahara GanjContact no: 0522-4008170

Name of the unit: Just CasualActivity: Formal WearKey person: Mr. RameshAddress: Sahara Ganj

Contact no: 9026604212

Name of the unit: Dollar StoreActivity: Apparels & AccesoriesKey person: Mr. PunitAddress: Sahara GanjContact no: 9026678944

Name of the unit: StatusquoActivity: Apparel Store

Key person: Mr. Sharad JainAddress: Sahara GanjContact no: 9415105311

Name of the unit: I VowActivity: Kids WearKey person: Mrs Reena AgarwalAddress: Sahara GanjContact no: 0522-4104708

Name of the unit: CobbActivity: Apparel StoreKey person: Sukriti GuptaAddress: Sahara GanjContact no: 9415425071

Name of the unit: Nomadic

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Activity:JeansKey person: Mr. VishalAddress: Sahara GanjContact no: 9389916172

Name of the unit: Club FoxActivity: kids WearKey person: Mr RaviAddress: Sahara GanjContact no: 9628004488

Name of the unit: MetroActivity: FootwearKey person: Mr AshfakAddress:Sahara GanjContact no: 9335743132

Name of the unit: K.loungeActivity: Apparel StoreKey person: Mr RamAddress: Sahara GanjContact no: 0522-3934600

Name of the unit: BarbieActivity: ToysKey person: Mr VaibhavAddress: Sahara Ganj

Contact no: 0522-4041138

Name of the unit: AddidasActivity: Sports WearKey person: Mr Rajat BatnaAddress: Sahara GanjContact no: 0522-40444088

Name of the unit: Inc5Activity: Apparel StoreKey person: Mr ManojAddress: Sahara GanjContact no: 9670568451

Name of the unit: John HillActivity: Apparel StoreKey person: Mr AkshatAddress: Sahara ganj

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Contact no: 0522-2200550

Name of the unit: Home townActivity: FurnishingsKey person: Mr Harendra Pal Singh

Address: Sahara GanjContact no: 0522-4061229

Name of the unit: SubwayActivity: Food jointKey person: Mr AbhishekAddress: Sahara GanjContact no: 0522-4048865

Name of the unit: Jockey

Activity: GarmentsKey person: Mr Manmohan SahuAddress: Sahara GanjContact no: 0522-4025584

Name of the unit: TantraActivity: ApparelKey person: Mr AmitAddress: Sahara GanjContact no: 0522-411388

Name of the unit: ReynoldsActivity: StationaryKey person: Mr Sudhir KumarAddress: Shop no 125, Sahara GanjContact no: 0522-4047276

Name of the unit: MadameActivity: ApparelKey person: Mrs Tara BachaniAddress: Sahara GanjContact no: 9098935639

Name of the unit: Get gorgeousActivity: ApparelKey person: Mr AssamAddress: Sahara Ganj

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Name of the unit: Van HeusenActivity: Apparel StoreKey person: Mr Pawan MikijaAddress: Hazratganj

Contact no: 0522-4073150Name of the unit: Allen SollyActivity: Apparel StoreKey person: Mr SiddharthAddress: HazratganjContact no: 0522-4048421

Name of the unit: United Colors of BenettonActivity: Apparel StoreKey person: IsmileAddress: HazratganjContact no: 0522-4103349

Name of the unit: PumaActivity: T-Shirts/JeansKey person: Mr RakeshAddress: HazratganjContact no: 8009881761

Name of the unit: A.R.A AgencyActivity: Apparel StoreKey person: Mr Fahad

Address: HazratganjContact no: 0522-3050282

Name of the unit: Indian TerrainActivity: Apparel StoreKey person: Mr AnshulAddress: HazratganjContact no: 0522-4073456

Name of the unit: RaymondsActivity: Apparel StoreKey person: Mr Sumit ManglaniAddress: HazratganjContact no: 0522-4070782

Name of the unit: Modern Silk HouseActivity: Apparel Store

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Address: Sahara GanjContact no: 0522-4010080

Name of the unit: MoustacheActivity: Apparel Store

Key person: Mr Ranjit RoyAddress: Sahara GanjContact no: 0522-4016830

Name of the unit: Peter EnglandActivity: Apparel StoreKey person: Mrs Maya Pati KushwahaAddress: Shop no 108,Sahara GanjContact no: 0522-4004379

Name of the unit: TurtleActivity: Apparel StoreKey person: Miss SwatiAddress: Sahara GanjContact no: 0522-4077218

Name of the unit: Planet FashionActivity: Apparel StoreKey person: Miss DeepaliAddress: Sahara GanjContact no: 0522-400429

Name of the unit: LevisActivity: Apparel StoreKey person: Mr Sanjeev SrivastavAddress: Sahara GanjContact no: 9621894494

Name of the unit: The Body ShopActivity: CosmeticKey person: Miss Shadia KhanAddress: Sahara GanjContact no: 0522-4006672

Name of the unit: JashnActivity: Sarees & Dress MaterialKey person: Mr GhanshyamAddress: Sahara Ganj

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Contact no: 0522-3239901

Name of the unit: ArrowActivity: ShirtsKey person: Mr Jai SureshAddress: Hazratganj

Contact no: 0522-4105976

Name of the unit: Suri FashionActivity: Toys & garmentsKey person: Mr AshutoshAddress: Sahara GanjContact no: 8604631157

Name of the unit: DenizenActivity: Apparel Store

Key person: AmitAddress: Sahara GanjContact no: 9565128030

Name of the unit: PozeActivity: Apparel StoreKey person: Mr Mohd FaizAddress: sahara ganjContact no: 7897617655

Name of the unit: Spring TravelsActivity: Air TicketsKey person: Mr Anilah BanerjeeAddress: Sahara GanjContact no: 9839348383

Name of the unit: ModaActivity: FootwearKey person: Mr DipeshAddress: Sahara GanjContact no: 0522-4028581

Name of the unit: LeeActivity: Apparel StoreKey person: Mr ArvindAddress: Sahara GanjContact no: 0522-4071116

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Name of the unit: ProvogueActivity: Apparel StoreKey person: Mr Durgesh DixitAddress: Sahara GanjContact no: 9839190657

Name of the unit: ManyawarActivity: Groom WearKey person: Mr Arun ChatriAddress: Sahara GanjContact no: 0522-4066690

Name of the unit: WoodlandActivity: Footwear, apparel & AccessoriesKey person: Mr AkashAddress: Sahara GanjContact no: 0522-6453423

Name of the unit: Time FactoryActivity: WatchesKey person: Mr. Vikas SharmaAddress: Sahara GanjContact no: 988919975

Name of the unit: WillsActivity: ApparelKey person: Mr DevashishAddress: Sahara Ganj


Name of the unit: Modern Silk HouseActivity: ClothesKey person: Mr JashnaniAddress: HazratganjContact no: 0522-2210003

Name of the unit: LiliputActivity: Kids WearKey person: Miss RitikaAddress: Sahara GanjContact no: 9628916342

Name of the unit: NikeActivity: FootwearKey person: Mr Siraj Ahmed

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Address: HazratganjContact no: 9161800002

Name of the unit: Monte Carlo

Activity: ApparelKey person: Mr Atul RajpalAddress: Sahara GanjContact no: 0522-40626100

Name of the unit: Vision 360Activity: SpectaclesKey person: Mr Ashish SrivastavAddress: HazratganjContact no: 0522-3212770

Name of the unit: Jumbo ElectronicsActivity: ElectronicsKey person: Mr GurinderAddress: HazratganjContact no: 9794906374

Name of the unit: Time FactoryActivity: WatchesKey person: Mr Vikas Mishra

Address: HazratganjContact no: 9889199775

Name of the unit: Lula BrosActivity: Garments,TextilesKey person: Mr Kumar BhambhawaniAddress: HazratganjContact no: 0522-4072348

Name of the unit: Tommy HilfigerActivity: ApparelKey person:Address: Hazratganj

Name of the unit: Universal Watch HouseActivity: WatchesKey person: Mr Mohammad SohailAddress: Hazratganj

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Contact no: 0522-4047945

Name of the unit: Devi Radio GramsActivity: Electronics & LuggageKey person: Mr V. Mishra

Address: HazratganjContact no: 0522-4016160

Name of the unit: New Jain WatchesActivity: WatchesKey person: Mr Pankaj JainAddress: HazratganjContact no: 0522-4016424

Name of the unit: Lahore Opticals

Activity: OpticalsKey person: Mr Anil KapoorAddress: HazratganjContact no: 9339507501

Name of the unit: Daksh Distribution & Services Pvt. LTDActivity: HP PRODUCTSKey person: Mr Arvind TiwariAddress: HazratganjContact no: 0522-226001

Name of the unit: Royal CafeActivity: RestaurantKey person: Mr SinghAddress: HazratganjContact no:

Name of the unit: BataActivity: FootwearKey person: Mr K. SenguptaAddress: HazratganjContact no: 0522-2621790Name of the unit: Kohli BrosActivity: ApparelKey person: Mr Sandeep KohliAddress: HazratganjContact no: 0522-3298551

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Name of the unit: SamsungActivity: MobileKey person: Mr J k VahlAddress: HazratganjContact no: 0522-4021777

Name of the unit: MuftiActivity: Jeans & ShirtsKey person: Mr Rajeev KumarAddress: HazratganjContact no: 0522-4072101

Name of the unit: ABC Ganj OpticalsActivity: OpticalsKey person: Mr Vivek MotwaniAddress: Hazratganj


Name of the unit: Meena BazaarActivity: SareesKey person: Mr Dheeraj DimlaAddress: HazratganjContact no: 0522-2232696

Name of the unit: Calcutta in StyleActivity: Sarees & Lehnga

Key person: Mr Guncharan SinghAddress: HazratganjContact no: 0522-3918307

Name of the unit: SugnamalActivity: ApparelKey person: Mr Jaddish JagnaniAddress: HazratganjContact no: 9336844902

Name of the unit: AdaActivity: ApparelKey person: Mr Vinod PunjabiAddress: HazratganjContact no: 0522-4002532

Name of the unit: A. James & Co.

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Activity: ApparelKey person: Mr Ram BachaniAddress: HazratganjContact no: 0522-3919748

Name of the unit: Hush Puppies

Activity: FootwearKey person: Mr FaizanAddress: HazratganjContact no: 0522-4017373

project report: boi, ban of india

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