ATM players have been vocal about the interchange fee being lower than the underlying cost of an ATM transaction, especially because of the compliance cost of the additional guidelines. Interchange fee is decided by an NPCI Steering Committee, which primarily comprises banks.
The NPCI had recommended that the interchange fee be increased from Rs 15 to Rs 17. But the NPCI Steering Committee was unable to reach a consensus, and members requested the NPCI to seek intervention of the Department of Financial Services to fix the issue.
The CIT companies demanded an increase of Rs 5,000 for servicing every ATM and had told ATM providers that they would be unable to provide services if the prices are not increased. However, members of the NPCI committee believed that this request was too highly priced. The CIT companies would require 90 days to comply with the required changes.
“The net payers of interchange do not want an increase in the fee. Since the decision requires a majority vote, the interchange fee has been stuck at the same rate since six years,” said the executive of a leading ATM service provider.
He added that a regulatory intervention would become essential if the issue continues. The NPCI did not reply to an email by Business Standard.
The Confederation of ATM Industry (CATMi) warned in November that 100,000 off-site and a little over 15,000 white-label ATMs, or 50 per cent of the installed base of 238,000 units, could face closure because of low interchange fee and additional compliance costs.
While ATM providers and CIT companies say that a major chunk of ATMs could stop working soon, banks have assured that there will be no disruption for customers.
Executives at leading public and private banks told Business Standard they were connecting with their individual ATM operators to discuss the implications of the guidelines.
“It is an ongoing conversation and we will take all the measures to ensure that consumers are not inconvenienced,” said an executive of a private lender. However, ATM operators say some banks have not even discussed these new compliance requirements.
To hike or not to hike
The industry is divided over who would bear the additional cost burden
ATM players have been vocal about the interchange fee being lower than the underlying cost of a transaction
The NPCI had recommended that the interchange fee be increased from Rs 15 to Rs 17
NPCI Steering Committee was unable to reach a consensus, and members requested the NPCI to seek intervention of the Department of Financial Services