What Digital Push? Retailers Suffer As Swipe Card Machines Give Up

Retailers say that they are suffering due to slow speeds on card networks with each transaction taking more time. (Photo: iStock)

Even as the ongoing cash crunch speeds up the adoption of digital payments, retailers claim that they are suffering due to slow speeds on card networks, which is leading to failed or slow processing of payments.

On Wednesday, industry body Retailers Association of India wrote to the Indian Banks’ Association about the large number of transactions failing during peak hours, especially on weekends.

Machine Issues Slowing Down Checkout Process

“Approximately, five to seven percent of our transactions are under pressure due to machine issues,” said Kumar Rajagopalan, president of the retailers’ association while confirming that the industry body had reached out to the Indian Banks’ Association.

Rajagopalan said that the retailers’ body wants the banking association to bring all stakeholders in the payments ecosystem onto a common platform to resolve the issue “as soon as possible” so that customer inconvenience and drop in sales can be minimised. 

He added that the transaction failures have persisted for the last three weekends as point-of-sales machines declined payments during the high traffic period between 5 pm to 8 pm.

Kishore Biyani, founder and chief executive officer of the Future Group, which runs the hypermarket chains Big Bazaar and Easy Day, said transactions were getting delayed, especially when volumes were high.

Retailers are facing issues and we are talking to service providers to address the same. When volume of transactions surge, each transaction takes 10-15 minutes.

Kishore Biyani, Founder And Chief Executive Officer, Future Group

Customers Frustrated, Dissatisfied

Grocery and dairy company Heritage Foods Ltd claimed that more than 500 transactions have been affected each weekend due to card payment issues, which leave consumers dissatisfied. Dharmendra Matai, chief operating officer at Heritage Foods’ retail and bakery division, said that the situation had been “particularly bad” during the previous weekend.

In the grocery business, customers come in and typically spend 45 to 50 minutes shopping and are left dissatisfied when their transactions get stalled.

Dharmendra Matai, Chief Operating Officer, Retail And Bakery Division, Heritage Foods

Matai added that bankers should upgrade their servers and all service providers need to address the issue. The IBA couldn’t be reached for a comment.

These complaints come in the aftermath of a big digital push from the government as customers and merchants are being incentivised to carry out transactions through non-cash mediums amidst the shortage of currency in the economy.

While the banks have fast-tracked the process of acquiring and deploying ten lakh card payment machines in the next three months, dependence on two international giants has led to roadblocks in quick deployment and upgrade of the existing infrastructure.

Even as payment processing companies remain confident that new machines will be deployed in time, doubts persist about the strength of the existing payment infrastructure, which is seeing unprecedented volumes.

Deepak Chandani, Chief Executive Officer in charge of South Asia and the Middle East at Worldline, which manages one-third of India’s 15 lakh PoS terminals, said that observed failure rates are not unusual but accepted that there could be some “delay and slowness” in the network due to added traffic.

Peak volumes have jumped almost 200 percent, which is bound to add to the pressure on the network. Debit cards now constitute 75 percent of all transactions as opposed to about 40 percent before demonetisation.

Deepak Chandani, Chief Executive Officer, South Asia and Middle East, Worldline

Chandani added that there could be an issue of confusion among the merchants as well who may be new to the system.

“Many of the merchants have just moved to card payments from their cash-based models. So there could be a lack of awareness on how to operate machines which could be adding to the confusion,” he said.

Meanwhile, Porush Singh, division president for South Asia at Mastercard, said that he hasn’t come across any reports of transaction failures from card payment networks so far.

“We haven't seen any such thing from our end so far," Singh told BloombergQuint. "Card networks are more than geared to handle any and all volume of transactions, so there's no cause for concern about transaction failures.”

(The article was originally published in Bloomberg Quint)