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What is POS Limit?
A Point-of-Sale (POS) limit determines the amount of money that can be spent using a debit or credit card in a single transaction at a merchant’s POS terminal.
These limits are set by financial institutions like RBI to protect the cardholder and the bank from potential fraud and unauthorized online & offline transactions. The POS Limit helps payment processors and financial institutions to mitigate and manager their risk exposure.
What is POS Limit in Debit Card?
The POS limit in debit card is the amount of money spent in a single day or transaction, or the amount of cash you can withdraw with your debit card at a Point-of-Sale (POS) terminal in a store. The Reserve Bank of India (RBI) sets a POS limit on debit cards that varies based on your card type, bank, location, and type of account.
As per RBI guidelines, from May 2023 the maximum POS transaction limit on debit cards and full-KYC prepaid cards is capped at INR 10,000 per month with a maximum of INR 2,000 per transaction. These limits apply to cash withdrawals at Point-of-Sale (POS) terminals.
Additionally, there are daily limits based on location:
- Tier III and IV centres (population up to 50,000): INR 2,000 per day
- Tier I and II centres (population between 10,000 and 50,000): INR 1,000 per day
Types of POS Limits in Debit Cards
1. Daily Transaction Limits
This limit restricts the maximum amount you can spend in a single day using your debit card. The bank sets it and may vary based on account type and card variant factors.
2. Cumulative Spending Limits
Unlike daily transaction limits, cumulative spending limits are applicable for a specific period, such as a month or a quarter. These limits cap the total amount you can spend within the defined time frame.
For instance, if your daily transaction limit is ₹20,000 and you make two transactions worth ₹15,000 each on the same day, you would still be within your transactional limit. Still, you might exceed your cumulative monthly spending limit if other transactions have occurred.
What Type Of Cards Can Be Used For POS Withdrawals?
You can use various cards, such as debit, credit, and prepaid cards to make POS withdrawals. These cards should be affiliated with a network like Visa, Mastercard, or RuPay to facilitate POS transactions. It’s important to note that different banks may have varying requirements for POS transactions.
For instance, some banks may require the card to be EMV chip-enabled for added security. Additionally, certain corporate cards may have specific restrictions or higher transaction limits for POS withdrawals.
How Does POS Withdrawal Work?
POS withdrawal allows you to obtain cash during regular purchases at a point of sale (POS) terminal.
Here’s the POS withdrawal process:
- Request Cash: When purchasing, inform the merchant that you would also like to withdraw cash.
- Enter Amount: The merchant will enter the desired amount on the POS terminal.
- PIN Verification: You must enter your debit card PIN to authorise the transaction.
- Cash Dispensed: After verification, the POS terminal will dispense the requested amount along with your purchase.
POS withdrawal allows you to get cash while making regular purchases, eliminating needing a separate ATM visit. When you pay using your debit card at a point-of-sale terminal, you can withdraw additional cash along with your purchase. This feature provides convenience and saves time by combining both transactions into one.
Why does your debit card have a POS limit?
1. Security and Fraud Prevention
POS limits serve as a security measure to protect users from unauthorised transactions and debit card fraud. For example, the limited transaction amount will restrict potential losses if your card is lost or stolen. According to statistics, debit card fraud cases have increased recently, making POS limits crucial for safeguarding your funds.
2. Managing Risk and Financial Responsibility
Financial institutions use POS limits as a risk management tool. By setting transaction limits, they balance allowing convenient transactions and reducing the risk of financial harm for users. This ensures that users are responsible for their spending and are not exposed to excessive financial risks.
3. Customisation and User Control
Many banks allow users to customise their POS limits based on their spending habits and comfort levels. This customisation empowers users to set transaction limits that align with their financial goals and preferences. You can contact your bank or access your account settings online to adjust your POS limit accordingly.
4. Regulatory Compliance
Banks implement POS limits to comply with industry standards and regulations. These regulations aim to create a safer and more regulated financial environment by imposing transaction restrictions. This helps prevent money laundering, fraudulent activities, and other illegal practices in the banking sector.
5. Common Concerns and Misconceptions
Some concerns revolve around inconvenience due to low POS limits or confusion about how they work. It’s important to understand that POS limits in debit cards are in place for security purposes, ensuring the safety of your finances. Customisable options allow you to find the right balance between convenience and security.
What are POS Terminals?
POS (Point of Sale) terminals are electronic devices that process payments in retail and other business establishments. These devices allow customers to transact using debit cards or other payment methods. The POS terminal reads the card’s information, verifies it, and completes the transaction. It acts as a communication channel between the merchant, the customer’s bank, and the payment gateway.
Related Read: POS Machine Charges
POS Cash Withdrawal – Key Points To Remember
When it comes to POS cash withdrawals, there are a few key points that you should keep in mind.
- Ensure the security of your transactions by using trusted and secure payment gateways.
- Ensure to review your bank’s transaction limits for payment methods, especially concerning debit card transactions. Understanding these limits can help you manage your financial transactions more effectively and avoid any unforeseen complications or fees.
- Safeguarding your PINs and receipts is crucial to prevent unauthorised access to your account.
By following these measures, you can ensure secure and hassle-free POS cash withdrawals.
Related Read: What are the Different Types of POS Systems?
Frequently Asked Questions
1. What Is The Limit of POS In RBI?
The Reserve Bank of India (RBI) sets the POS limits for debit card transactions. The specific limit is determined by the bank or financial institution issuing the card and may vary based on factors such as your account type, card category, and transaction history.
2. How can you find out your POS limit?
You can refer to your bank’s website or mobile banking application to find out your POS limit. Alternatively, you can contact your bank’s customer service helpline for assistance.
3. Can you customise your POS limit?
Generally, banks set standard POS limits for their debit cards. However, some banks may offer customisation options, allowing you to increase or decrease the limit per your requirement.
4. What Is A POS Transaction?
A POS transaction is a financial transaction at a point-of-sale terminal where a customer uses their debit card to pay for goods or services purchased from a merchant. This could be in person at a physical store or through an e-commerce website.
5. What Is The Minimum Amount To Start POS?
The minimum amount required to start a POS transaction varies across banks and payment service providers. Some banks may not have minimum requirements, allowing merchants to accept payments of any value using their POS terminals. However, certain banks may have a minimum transaction amount, such as ₹100 or ₹200, to initiate a POS transaction.
6. How Much Can You Withdraw From POS Per Day?
The withdrawal limit from a POS terminal per day is subject to the maximum cash withdrawal limit set by the bank issuing your debit card. This limit varies among different banks and account types. Check with your bank to know the daily withdrawal limit applicable to your debit card.
7. Are POS limits the same for all debit cards?
No, POS limits can vary among different banks and card types. Each bank has its policies and discretion in setting the POS limits for their debit cards. Factors like account type, card category (e.g., classic, gold, platinum), and customer’s relationship with the bank may influence the assigned POS limits. This is also true for corporate card payments.
