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India's ATM industry seeks higher interchange fees

January 2, 2018

The ATM industry in India wants the central bank to raise the interchange fee for ATM transactions on account of the increased costs of running the channel, the impact of demonetization and a decline in transaction volumes, according to livemint.com. The interchange fee is what banks pay one another for the use of other banks' ATMs by their customers.

National Payments Corp. of India is leading the push, having discussed the change with public sector banks and private sector lenders separately, according to two individuals who spoke on the condition of anonymity.

Private sector banks want to raise the rate.

Certain big public sector banks oppose the increase since it would result in higher costs, according to an executive director of one such bank who spoke on the condition of anonymity.

White-label ATM operators, non-bank entities that own and operate ATMs, have also sought an increase in the fee.

AGS Transit Technologies, which manages more than 60,000 ATMs, provided information to RBI to increase the fee from Rs15 to Rs18, said Ravi Goyal, AGS's managing director. 

ATM transactions have fallen since the November 2016 demonetization of high value banknotes and an emphasis on digital transactions, causing several banks to rationalize their ATM networks.

A Union Bank of India senior banker confirmed that the banks have collectively sought an interchange fee increase.