India's digital payments ecosystem is grappling with a shortage of point-of-sale (PoS) terminals, primarily due to geopolitical tensions in West Asia and supply chain disruptions linked to memory chip production in China. As nearly all PoS terminals in India are imported, this reliance has made the local supply vulnerable. Demand for PoS terminals has surged as merchants upgrade to devices that support mobile payments, tap-and-pay, and chip-and-pin transactions. Amrish Rau, CEO of Pine Labs, reported a backlog of nearly 200,000 deployments, with 70% of PoS transactions now processed through the Unified Payments Interface (UPI). However, the prices of these devices have risen by 15-20%, increasing from around ₹8,500 to over ₹10,000, which is squeezing the margins for payment firms. Major deployers like Innoviti Payments are now extending the lifecycle of existing terminals rather than replacing them due to these rising costs and supply shortages. Despite a 24% increase in new PoS terminal deployments in FY25, driven by RBL Bank, growth is expected to stabilize in FY26.