Infrastructure sharing reduces point of sale machines

The number of point of sale (POS) machines in retail outlets has dropped for the first time in three years as more banks signed up to shared infrastructure providers and businesses integrated payment systems.

These machines are used to process retail payments by debit and credit cards. They dropped by 1,575 to 16,604 as at December last year but the value of transactions went up.

Data from the Central Bank of Kenya (CBK) indicates the number of these machines has consistently risen over the past three years. Between July 2009 and December 2009, the units went up from 5,063 to 15,871. A year later, they rose to 18,179.
The drop comes amidst calls for fewer POS and automated teller machines (ATM) to improve efficiency mainly by shared infrastructure providers Kenswitch and Paynet, the owners of Pesapoint branded ATMs.

The value of transactions through POS machines jumped by 48 per cent to Sh64.5 billion as at the end of last year as banks issued more cards and allowed free use the machines.

“Some merchants have withdrawn their devices as their cards can still be acquired due to inter-operability provided by shared infrastructure switches,” said George Wainaina, managing director of Kenswitch.

The increased adoption of E-POS technology that allows supermarket tills to be used as a POS has also contributed to the fall. “One of the big banks is also in the process of upgrading its POS and is withdrawing its old devices from the market,” said Mr Wainaina.

Mr Frank Kamau, the general manager at Tuskys Supermarkets, said consumer awareness on the use of plastic money and loyalty cards could be attributed to the higher volumes and value of transactions. “POS machines could have dropped because some of these functions have been transferred to our cashiers,” he said.

The number of transactions that went through POS machines went up by 20 per cent as at the end of last year to 6.6 million, almost equal to the 6.8 million transactions that went through ATMs.

Barclays, KCB, Equity and Equatorial Commercial Bank are some of the banks operating POS machines.

“There has been a flight to quality and there may be some vendors who took some machines offline because of low turnover…the ones which had high volume saw the value of transactions go up,” said Suprio Sengupta, general manager I&M Bank.
Debit cards increased by 38 per cent to 8.5 million, ATM cards rose by eight per cent to 1.4 million while the total number of cards issued as at the end of last year stood at 10.1 million.

The growth in the value of transactions through POS machines was also due to agency banking where the machines are also used to make deposits, said Mr Wainaina.

He said indications show banks would recruit more agents to provide a low cost alternative to branches especially in rural areas and more providers will continue to adopt shared infrastructure.