Transactions At ATM May Become Costlier As Operators Seek Increase In Inter-bank Charges
The operators of the automated teller machine (ATM), especially those pertaining to the private sector, are seeking to a rise in the inter-bank charges for ATM transactions, saying that the demonetization, fewer withdrawals at the ATMs and increased cost pressures; warrant such an increase.
The inter-bank charge is the fee that is charged by let’s say a first bank from the second bank for the use of the first bank’s ATMs by the customers of the second bank. If the operators have their way and the banks pass on part of this cost to consumers, the number of free ATM transactions allowed in a month for the customers might be revised.
As per media reports, some large public sector banks are not in favour of such an increase, as this would lead to higher costs, however, private sector banks favour such an increase. It may be noted that, after demonetization, announced by the Government on November 08, 2016, the country has witnessed an increase in the digital transactions and a decline in the ATM usage, which has prompted several banks to go slow on the ATM network expansion. As per industry sources, some of the largest micro-ATM network operators, including state owned Andhra Bank, IDFC Bank & Syndicate and private lenders, including IndusInd Bank & Axis Bank, have lobbied with the ‘National Payments Corp of India’ (NPCI) to raise inter-bank fee to 1% from 0.5% to make the managing of these ATMs a viable business.
As per a letter sent to the NPCI by these operators, Revised AEPS (Aadhaar Enabled Payment System) interchange which was applied on banks with retrospective effect has impacted the creation of Aadhar payment acceptance infrastructure.” It states, “Banks who want to create, deploy and maintain such a last mile BC network now have to incur losses to service other bank customers.”White label ATM operators, the non-bank entities that set up, own and operate ATMs, are also seeking an increase in the fee. As per livemint.com, AGS Transact Technologies, which manages over 60,000 ATMs, has made a representation to RBI to increase the charge to at least INR 18, as the current charge of INR 15 is not sufficient to cover costs. V. Balasubramanian, president, digital payments, FSS, which manages over 40,000 ATMs in the country, opined, “When it is not viable I will shut it (ATM). The ATMs that did business based on transactions were shut. It is not just me but everybody has done it because cash is still not coming in. When demonetization happened, I still had to pay the rent and electricity. Hence, my cost remained same without any revenue.”