ATM operators demand an increase in interbank charges

The automated teller machine (ATM) industry wants the central bank to increase the interchange fee for ATM transactions because of the increased costs of running the channel, impact of demonetisation and a fall in transaction volumes.

Interchange fee is the fee that banks pay to each other for the use of their ATMs by other banks’ customers.

The representation is being led by the National Payments Corp. of India (NPCI), which has held discussions with public sector banks and private sector lenders separately, two people close to the development said on the condition of anonymity.

The demand for raising the rate is being led by private sector banks. Some large public sector banks, however, are against the increase; a rise in charges will lead to higher costs for them, said one of the two persons cited above, an executive director of a leading public sector bank.

“We also said that our charges are very high and if you increase the fee, public sector banks are bound to lose due to cost escalation as they are the net issuers. We not only issue normal debit cards but also Rupay cards. In this case, they (NPCI) are finding out the costs that are being incurred by public sector and private sector banks. And after ascertaining the costs they will discuss with all stakeholders and decide the rate,” the banker said. He added that since private sector banks started setting up ATMs before public sector banks, they had a locational advantage.

white label ATM operators, which are non-bank entities that set up, own and operate ATMs, have also sought an increase in the interchange fee. Ravi Goyal, managing director of AGS Transact Technologies, which manages over 60,000 ATMs, said the firm has made a “representation to RBI with all facts and figures to increase it (interchange fee) to at least ₹18”; the current charge of ₹15 is not sufficient to cover costs, he said.

After the November 2016 demonetisation of high-value banknotes, and the subsequent emphasis on digital transactions, ATM transactions have declined, which has led to several banks rationalising their ATM network.

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source: paper.hindustantimes.com

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One response to “ATM operators demand an increase in interbank charges

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