Banking News

ATM manufacturers seek higher interchange rates


ATM operators have made a representation to the Reserve Bank and the other authorities to hike the current interchange rate on transactions to make them financially viable, suggesting they be linked benchmarks like wholesale price index, the way toll rates are linked.

The Confederation of ATM manufacturers of India CATMI, an industry body that represents the interest of stakeholders has made a request to both the Reserve Bank of India and National Payment Corporation of India,-NPCI which manages the National Financial Switch that interconnects the ATMs.

“We have asked them to review the entire method of reviewing the interchange. It should be more periodically done and could be linked to benchmarks like the WPI, the way the government links tolls at toll booths.” said K Sriniwas Rao, a director at CATMI.

Justifying their demand for higher interchange rates, the ATM manufacturers say that interest costs of putting money in the ATMs has gone up. While increase in repo rate from 4 percent to 6.25 percent is estimated to have increased cost by Rs 1200 per ATM, the rupee depreciation has increased the machine cost by 5 percent. Also higher inflation has pushed other costs like transportation costs.

Though interchange rates for both white label as well as brown label ATMs run by commercial banks are below cost, the white label ATM manufacturers say that banks can absorb higher cost as they have other avenues of making money. “ But for white label ATM manufacturers interchange is the only source of revenue” Rao said. His firm India1 Payments is a major manufacturer of white label ATMs. It is reckoned that White label ATM manufacturers have collectively made losses worth Rs 700 crore.

The industry body has asked for an interchange of Rs 23 per cash transaction and Rs 8 per non-financial transaction. The Reserve Bank had last revised the interchange rate in June 2021 when the rate for cash transaction was fixed at Rs 17 per transaction and Rs 6 for non-cash transaction.


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