Page 50 - Banking Finance October 2022

ARTICLE

transaction from Rs 20 as before, beyond the free transactions
for customers. This hike takes into account the higher outgo
on interchange for banks. It came into effect from January 1,
2022. For years, private banks and white label ATM operators
had been expecting an increase in the interchange fee to Rs
18 from Rs 15. In simple words, one will have to pay more for
using other banks' ATMs beyond the free limit. The interchange
on non-financial transactions was also enhanced to Rs 6 from
Rs 5 for non-financial transactions in all centres, effective from
August 1, 2021. These rules and guidelines also hold true for
transactions done at cash recycler machines, other than for
cash deposit transactions.

India also has one of the lowest ratios of ATM cash
cost should be taken on the basis of actual amount incurred
withdrawals as compared to the cash in circulation, according
rather than estimation. It could be done through fixing the
to an RBI report, `Benchmarking India's Payment Systems'
fee through comprehensive 'inter-bank agreements' after
released in June 2019. It is also an index of the low efficiency
assessing all possible technical and non-technical
in recycling cash, meaning, the cycle of cash withdrawals,
parameters.
payments made with it and again depositing the cash through
the banking system, said the report. The data for the last 3-
Utility and significance of ATMs are inextricably linked to the
4 years reflects that banks have now slowed down in setting
use of cash in an economy. If cash starts losing its dominance
up new ATMs. There have been several instances of the PSU
as 'the-king', the co existence of ATMs could automatically
bank mergers wherein the managements have decided to
head towards an end. Intimidated by the ongoing rise of
shut down ATMs if the merged banks were having
cryptos, a range of central banks across the world are no
independent cash machines in the same locality. Moreover,
more reluctant to experiment with the digital currency.
since the cost involved in deploying an ATM is higher, one
can't blame banks if they have decided against opening new
Bahamas has already unrolled the first official digital
ATMs and use the already existing machines by paying a lower
currency of the world whereas El Salvador has recognized
fee for every transaction by their customers.
Bitcoin as legal tender. China, Japan, Sweden, Bank of
England and European Central Bank are already working on
Conclusion
the trials of CBDC and RBI is the latest to join the crusade.
The fast emerging fintech industry will surely further erode
the utility of ATMs for both banks and non-banks, which Nevertheless, it's too early to write a eulogy for cash as well
have deployed these, as well as customers. In fact, the as ATMs. It is very much possible that ATMs start being
entire payments system all over the world is constantly replaced with cash recyclers. It has already dawned over
seething, both in scale and scope. Dealing with these the Banks and independent ATM deployers (IADs) that ATMs
changes will definitely define the future landscape of the or their advanced version, the ACR (Automated Cash
payments system. As suggested by the Nandan Nilekani Recycler), are very much required in India, so as to serve
Committee on Deepening of Digital Payments, ATMs need the cash requirements of the population.
to undergo change and should be seen as an access point
for customer education, awareness, and support. Digital payments, especially UPI, has undoubtedly multiplied
its fold during this period, but cash remains the lubricant of
In addition, they have to support the gamut of banking the economy. In the days to come , we might be seeing the
facilities that includes cash deposit, bills payment, funds ATMs regaining their rightful spot and lustre as the
transfer, tax deposits, mobile recharge, investments etc. accelerators of economic and inclusive growth. They might
Evaluation of ATM transactions needs to be done on cost- claim their thrust among the other dispensation models like
plus basis, keeping in view the official changes introduced UPI, micro ATMs, e-wallets, etc. But the need of the hour
by RBI from time to time. It is worth mentioning that the is such that there will be enough play for all.

50 | 2022 | OCTOBER | BANKING FINANCE