The Confederation of ATM Industry (CATMI) has sought immediate regulatory intervention to correct the fee structure in the loss-making ATM deployer industry.
It says the latest RBI direction to reconfigure cash vending machines will increase their cost by at least 25 per cent, leaving them unviable.
The industry also said that meeting the RBI directive will be contingent solely on banks taking on the additional cost, as this will increase their operational cost by 40 per cent.
On June 21, RBI had issued a circular mandating control measures for ATMs and also to reconfigure the machine cassettes to accommodate the new set of banknotes coming to the markets.
The industry is crying foul over the mounting losses as the transaction fee is only Rs 15, which was fixed in 2012.
“The white-label ATM operators are already under tremendous financial stress and the cost of additional investments required to meet the RBI stipulated security standards will further increase their transactions cost by at least 25 per cent, CATMI director general Lalit Sinha told PTI.
“RBI should take all the stakeholders including banks and ATM service providers into consideration to find out the way forward to ensure compliance to the newly announced measures,” he added.
He also said, “the cost of a transaction on ATM works out to be Rs 23 for a 150 hits/day ATM. Against this, the interchange fee that the acquiring bank/white-label ATM operator gets is only Rs 15.
“The interchange fee of Rs 15 on cash and Rs 5 on non-cash transactions is constant and not revised since 2012 despite repeated requests by the industry,” he said.
While welcoming the RBI notification of June 21, that mandated more control measures for ATMs, Sinha said meeting the directive is contingent on banks bearing the additional expenses.
According to him, the recent compliance-related directives by the RBI such as cash management/logistics, cassette swap, etc will demand a sizable investment that may account for up to 40 per cent of the cost of ATM machines.
“White-label ATM operators are on a very weak viability structure as the cost of transactions are way higher than the interchange fee they receive. The new compliance cost will put the already-stressed operators into further viability turmoil,” he said.
Claiming that white-label ATM operators are the only entities deploying ATMs in remote villages, he said “with this additional cost of compliance and cash management costs, future deployments may come to a grinding halt unless interchange is increased on a priority basis.”
ATM growth is already at standstill while the card issuance continues aggressively powered by Jan Dhan scheme and other government initiatives.
As banks, especially the state-run banks, are rapidly shutting down ATMs, the debit card to ATM ratio has gone up especially in semi-urban and rural areas. But this also increases investment burden on the industry players and banks should come forward and fund this “in the form of an increase in the interchange fee paid by the card issuers to the ATM deployers, else we will continue to see a lull in expansion of the ATM network, Sinha said.