India’s Banks to Meet on ATM Charges

The National Payments Corporation of India (NPCI) has convened a meeting of the country’s banks on 15 January to discuss the impact of additional account security costs for automated teller machines (ATMs), reports
The Times of India

According to the paper, the industry is polarised over the issue between banks who are net users of other banks’ ATMs and banks that make a net earning through their machines.

Most public sector banks oppose a hike in charges because on a net basis they end up paying for their customers using other banks’ ATMs. These banks are referred to as net issuers, as the cards they have issued exceed the number of ATMs required to service them.

Large private sector banks such as Axis, HDFC and ICICI, which each have a network of more than 10,000 ATMs each, support an increase as their network is used by other banks. These banks are referred to as net acquirers. SBI group, despite having an ATM network of over 40,000 machines, is a net issuer since it has a debit card holder base of 15.47 crore banks issued across SBI and associate banks.

Revised charges will affect banks’ customers only to the extent they exceed the free usage prescribed by the Reserve Bank of India (RBI). The central bank allows customers free usage of third-party ATMs for up to five transactions subject to total withdrawal of 10,000 rupees (INR) per month.

Besides the number of cardholders to every ATM, the status of a bank – whether a net acquirer or net issuer – depends on the location of their ATMs. Private banks such as Axis and Kotak, have located their machines at high-footfall areas and some see transactions of almost 500 per day. ATMs for public sector undertaking (PSU) banks (in which the government has a majority stake) are closer to their branches and the average transactions are much lower.


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