Money & Banking

White-label ATM operators seek higher interchange fee, more free transactions

Mumbai | Updated on August 01, 2019

White-label ATM operators in the country want a steep hike in interchange fee, along with more free transactions for customers.

Running in loss

In their discussions with the committee set up by the RBI, they have contended that most of them are in loss due to the high costs and large infrastructure they have to deploy and reach Tier III and smaller towns.

Sources said that WLA operators are seeking a hike of at least ₹8 to ₹10 in interchange fee for financial transactions, as the earlier plan for a ₹3 or ₹5 increase will not be sufficient to meet costs. If required, there can be a differential fee structure as well with a different fee for ATMs run by banks.

“We are making a representation to the RBI-appointed committee on interchange fee. The costs have significantly increased for WLA operators with the new guidelines and the revenue we earn is not sufficient,” said two executives from WLA operators.

“Banks earn fee income from a number of other activities, and so interchange fee may not be a big source of revenue for them,” they contended, adding that with most banks not deploying more ATMs, it is up to WLA operators to do so.

A higher number of free ATM transactions against the current limit of three per month will also increase volumes for ATMs and increase revenue, they further said, adding that it would also benefit customers in small towns who may want to withdraw small amounts multiple times in a month.

With banks and WLA operators pointing to high costs after new norms for upgrade and security of ATMs were issued, the RBI had, in June this year, set up a six-member committee headed by VG Kannan, Chief Executive Officer, Indian Banks’ Association, to look into the issue.

The committee is expected to submit its report within two months from the date of its first meeting.

Interchange fee, which is paid by banks for use of ATMs by their customers at other banks, has beens tatic for over five years now. Banks have been seeking a hike of at least ₹3 from the current ₹15 per cash transaction to ₹18, and for other non-financial transactions to be raised to ₹8 from the current rate of ₹5.

The ATM infrastructure in the country has also seen slow growth, with just 2.06 lakh such devices in May 2019, down from 2.08 lakh in March 2017, although the number of transactions per ATM have increased.

Published on August 01, 2019

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