Do You Know About The Cash for Swipe?

Did you ever imagine that the cash swiping machines of banks could make many millionaires in the country? Ever thought that this simple instrument could revolutionize the way banking was conducted in the country? Well, wonder no more as many people have begun to earn large sums of money with the help of these machines, by offering a facility known as ‘cash for swipe’. Young traders have amassed huge sums of money by lending money in this manner, for traders who require money urgently. With a capital investment of a mere two to five thousands, these people have become millionaires. Under the cash for swipe facility, all these “instant” moneylenders possess as their capital assets are the swipe machines of different banks, with an account of their firm in each of these banks. Traders who run businesses nearby approach them for money, when they are in urgent need of it, as going to a financial institution or borrowing from relatives or friends can be time consuming as a lot of time of time may be spent on the verification of credentials of the borrower, before lending money. All that a trader, who is in urgent need of money, is required to do is rush to these instant money lenders, swipe their credit cards, and get the required amount of cash from them. While the money is credited back in these moneylenders’ accounts within a few hours or sometimes, even a few days, they enjoy a reasonable amount of profit with the help of interest rates on these transactions, in addition to bank charges which are also borne by the borrowers.

Although this practice has not yet gained legality in India, it is quite a popular practice in countries like the United States of America and the United Kingdom. While this instant money dispensing system is not allowed in our country, there aren’t any strict regulations barring its use either. As the deal is struck between the credit card holder, who uses his card in order to access the money, and the merchant establishment, which charges a commission for the money borrowed, it is difficult to possess any or little knowledge on such transactions. If the credit card user is willing to pay back the money on time, along with the merchant establishment’s commission, then the bank or the regulatory authority of the country may not have any idea about such a transaction. While banks have a confused stance on this issue, unable to decide on what course to take, cash for swipe deals are gaining momentum in the country. Many banks even go on to claim that they will have little or no impact if their customer does not make any default in his payment to the bank. Other banks perform the required research on the need for swipe machines before issuing the point of sale terminals to them.

While there is a possibility of cheating and practicing fraudulent practice in every sector of the country, India has witnessed a less percentage of malpractice as compared to the other countries of the world. Banks in the country have implemented various norms to record any abnormal behavior in transactional activity, ie, if people withdraw absurdly high amounts of money with their credit cards on an irregular basis. This is done by various tools and instruments like velocity checks. In the normal course, banks choose to ignore such transactions as it draws a huge amount of profit for them on an almost daily basis. If this system continues to gain popularity and momentum at such a high rate, it will soon replace the traditional lending systems of pawn brokers who charge extremely high interest rates on their loans and also on the loan that is lent by financial institutions.