POS Limit in Debit Card?
05 Jun 2023

POS Limit in Debit Card?

Decoding the POS Transaction Limits on Debit Cards.

Key Takeaways

  • POS machines are an alternative for ATMs and provide cash withdrawal facilities.
  • RBI sets a POS limit on Debit Cards that varies according to your location.
  • With POS, you can withdraw up to INR 2,000 in smaller towns and up to INR 1,000 in bigger cities.
  • You typically have to pay a 1% charge for using the POS withdrawal facility.
  • You can make POS withdrawals at participating merchant outlets.

Today, you can easily make payments and shop on the internet using your bank cards, internet and mobile banking platforms, and other modes of online payment. But you typically need cash for small-value transactions. Considering its large-scale usage, different means of accessing cash prove beneficial. To that end, the Reserve Bank of India (RBI) has permitted Indian banks to extend the facility of cash withdrawals via point-of-sale or POS terminals. So, what is POS and what are POS cash withdrawal limits? Learn all about it in this article.

What is POS?

POS is a system, or an electronic payment terminal mainly found in retail outlets. Most merchants use POS machines to accept payments for the products or services they sell, and to allow customer to conduct hassle-free, in-person transactions.

Besides accepting payments, a POS system allows merchants to manage customer information, inventory, and cash registry digitally. As a customer, you benefit from the ease of transaction it offers. All you need is your Debit Card to make POS payments. With the RBI now permitting cash withdrawals at POS, you can now access cash through POS machines too. The RBI has also determined POS cash withdrawal limits.

What is the POS limit on a Debit Card?

Since POS is not the primary means of withdrawing cash, it comes with a cash withdrawal limit. The POS transaction limit for withdrawing cash per day is up to INR 2,000 in Tier III and IV centres, while you can withdraw up to INR 1,000 in Tier I and II centres. Tier III and IV centres are those with a population of 50,000 and Tier I and II centres have a population ranging between 10,000 to 50,000.

The logic applied while determining the POS cash withdrawal limits, i.e., a higher limit for Tier III and IV centres and a lower limit for Tier I and II centres is that you can easily find ATMs in bigger cities than in smaller towns. Note that you may have to pay a small fee, not exceeding 1% of the withdrawal amount, for POS cash withdrawals.

Additionally, the POS cash withdrawal facility is only available when you use Debit Cards, open-system prepaid cards, and Unified Payment Interface (UPI). You may also use an electronic card linked to an overdraft facility if you have a Pradhan Mantri Jan Dhan Yojana Account. However, the POS limit on Credit Cards does not apply as you cannot use credit cards for POS cash withdrawals.

How does POS withdrawal work?

You can visit a merchant or a bank offering POS cash withdrawal facilities. Not all merchants with POS machines provide this service. Moreover, the banks providing the POS terminals must authorise the merchants. For your convenience, such establishments will indicate the availability of the facility along with the charges.

To initiate the withdrawal, you only have to provide your Debit Card and enter the PIN. The trained staff at the POS terminal will assist you in the process. Once done, you will receive the withdrawal receipt. If you have made a purchase at the merchant establishment along with cash withdrawal, you are entitled to receive two separate receipts.

Final Note:

Now that you know what is POS and how it works, you no longer need to worry about looking for ATMs if you run out of cash. All you need to do is visit a participating merchant providing POS cash withdrawal facilities and withdraw cash within minutes. Since the limit is on the lower end, POS cash withdrawals are better suited for small ticket payments. For other purchases and transactions, you can always pay the merchant digitally through the same POS machine.

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*Disclaimer: This article is for information purposes only. We recommend you get in touch with your income tax advisor or CA for expert advice.