ATM operators seek Rs 2 hike in interchange fee for viability
Mumbai, June 13, 2024
Synopsis
The Confederation of ATM Industry, or CATMI, wants this fee to be raised to a maximum of Rs 23 per transaction to ensure more funding commitment for the business.
India's ATM operators have approached the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) for an increase in the interchange fee paid by customers on cash withdrawals.
The Confederation of ATM Industry, or CATMI, wants this fee to be raised to a maximum of Rs 23 per transaction to ensure more funding commitment for the business.
"The interchange rate was increased two years back; we have been reaching out to the RBI, and it looks like they are supportive of it. We (CATMI) have requested the fee to be raised to Rs 21 while some other ATM manufacturers have sought to increase this to Rs 23," said Stanley Johnson, executive director of AGS Transact Technologies, an ATM manufacturer. "The last time, it took several years to hike this but I feel everyone is aligned and it's only a matter of time before the (fee) increase will happen."
The RBI did not respond to an email query seeking a response.
In 2021, the interchange fee on ATM transactions was raised to Rs 17 from Rs 15. ATM interchange is the charge paid by the bank that issues the card (issuer) to the bank where the card is used to withdraw cash (acquirer). In addition, the cap on the fee that can be charged to the customer was increased to Rs 21 per transaction from Rs 20.
"There has been heavy lobbying across for increasing the interchange rate. A representation has been sent through NPCI and banks have also agreed for a rate increase," said another ATM manufacturer. "The increase in the interchange fee is a decision taken by the NPCI because the rate is fixed by them."
Currently, for the six metro cities of Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, and New Delhi, banks offer their savings bank account holders a minimum of five free transactions in a month, while three transactions are free at any other bank's ATM.
[The Economic Times]
