Money & Banking

With fall in transactions, ATM operators hope for rise in interchange fees

Surabhi Mumbai | Updated on June 03, 2020 Published on June 03, 2020

White-label operators are hoping for a hike in interchange fees amid a drop in transactions at ATMs and rise in logistics costs during the national lockdown.

“Interchange was reduced in 2012 and the work and costs of WLA operators have been increasing. The industry has been under a lot of stress,” said a WLA operator, adding that the Reserve Bank of India had set up a committee last year to look at the issue.

“We understand that the recommendations were submitted in December 2019, but no decision has been taken,” he noted.

Industry body Confederation of ATM Industry (CATMi) is also understood to have sent a representation to the Reserve Bank of India to look into the issue. Interchange fee is paid by banks for use of ATMs by their customers at other banks. It has not been revised since 2012, and there have been expectations of at least a ₹3 hike from the current ₹15 per cash transaction to ₹18.

“Transactions at ATMs have seen a significant dip starting from the last week of March. With the restrictions on movement due to lockdown and spending only on essential commodities, average transactions have dropped by over 35 per cent to 40 per cent in the recent past,” another industry player pointed out, adding that they do not expect the situation to normalise for another three to six months.

Operators also point to increased difficulties and costs in cash handling and repairs, especially in semi urban and rural areas post the lockdown.

“There is a real danger of many ATMs by WLA operators shutting down in rural- and semi-urban areas. These companies were already facing losses before the lockdown, and the situation has become more difficult since,” said the second player, adding that many cash replacement agencies have also been asking for higher fees.

CATMi had also written to Finance Minister Nirmala Sitharaman on the issue. “We are leaving no stone unturned in our efforts to keep ATMs up and running; the Covid-19-led economic slowdown has further worsened the financial issues we have been facing in the last five years under pressure from increasing operating costs and the costs on compliances,” it had said while seeking a stimulus package, including increase in ATM Interchange rates, as well as reduction in GST rates to 12 per cent from the current 18 per cent.

Published on June 03, 2020
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