The cost structure of automated teller machine (ATM) channels is set to undergo a significant change, which could impact customers who frequently withdraw cash. The interchange fee, which is paid by the card-issuing bank when a customer swipes at another bank’s ATM, may be increased to Rs 20-23. Additionally, higher cash withdrawals could soon come with an additional convenience charge.
Differential pricing may also be introduced for customers in underpenetrated areas to facilitate withdrawals by direct benefit transfer (DBT) beneficiaries. These potential changes are the result of recent discussions between the Confederation of ATM Industry (Catmi) and the Reserve Bank of India (RBI).
The ATM industry has seen a surge in orders for ATMs and cash recycling machines, with 45,000 units expected to be deployed between September 2023 and March 2024. This represents a significant increase compared to previous periods.
The RBI had previously set up a committee to review the ATM interchange fee structure, with the aim of boosting ATM deployment in unbanked areas. The committee had recommended periodic reviews of interchange and customer ATM usage charges to address cost-related challenges.
Industry experts suggest that the interchange fee may need to be raised to Rs 23 to account for cassette-swap costs, a mechanism that aims to streamline cash replenishment at ATMs. Despite plans to implement cassette swaps across the ATM network, delays have been encountered, prompting the industry to seek extensions from the RBI.
Overall, the proposed changes in the cost structure of ATM channels could have implications for customers and the industry as a whole. Stay tuned for updates on this evolving story.