postal department will introduce pre-paid cards

NEW DELHI: The postal department will introduce pre-paid cards that will enable cashless transactions at retail outlets across the country, as it looks to leverage the cash-handling expertise of its 1.5 lakh post offices to generate revenues.

The magnetic strip-based cards could be used at merchant establishments and automated teller machines (ATMs) where cards from VISA, Mastercard and American Express are accepted, said a communications and information technology ministry official.

Bankers said this would help the government implement its inclusive growth strategy. “It is an excellent platform for reaching out to communities where financial services are difficult to tender,” said Rana Kapoor, managing director and chief executive of private sector lender Yes Bank. The department of posts is one of the most inclusive distribution networks in the country and it understands financial transactions well, he said.

The department proposes to allow top-ups in the multiples of Rs 1,000 up to Rs 50,000 and aims to complete project formalities such as procurement and training by the first quarter of fiscal 2010.

These cards, which will allow people across the country to make cashless transactions, could boost retail spending by rural households . “The cards could be used for various purposes such as at point of sale, at ATMs, on the Internet, for mobile commerce and for facilitating electronic money transfer,” the government official quoted earlier said, requesting anonymity.

The department has begun identifying a banking solutions partner. The banks will share a percentage of the revenue earned from pre-paid cards with the department, the official said. The banks will have the technology platform and disclose their technology compatibility and certifications with VISA, Mastercard and American Express.

According to the proposal, the department will provide the infrastructure and network to sell and distribute the cards while the bank will partner in operating the pre-paid cards through post offices.

The department is planning to computerise all its post offices in the next two years.

Source : Economic Times dated 29.3.2010