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India's IADs applaud ATM security mandate, but say FIs should foot the bill

June 29, 2018

The Confederation of ATM Industry, a trade association representing nonbank stakeholders in India's ATM sector, has applauded a directive by the Reserve Bank of India that mandates the implementation of ATM security measures on a fixed schedule.

However, in a press release, CATMi, argued that banks, not independent ATM operators, should bear the cost for upgrades to bank-branded machines.

The organization said that members have already borne the cost of cash management and logistics updates, cassette swaps, and other initiatives resulting from earlier directives.

CATMi also called for an increase in the prevailing interchange rate to enable ATM operators to pay for these types of sizable investments in the future.

K. Srinivas , a spokesman for the trade group and CEO of BTI Payments Pvt. Ltd., said that white label ATM operators were already struggling for viability, with transaction costs exceeding interchange fees received. 

"WLA operators are the only entities deploying ATMs in underpenetrated rural areas," he said. "With this additional cost of compliance and cash management costs, future deployments may come to a grinding halt unless interchange is increased on a priority basis."

CATMi said that growth in India's ATM base has already stalled, due to government initiatives driving bankcard issuance and electronic payments. "Banks are in a rapid shutdown spree on ATMs," the release said.

At the same time, bankcard growth has greatly increased the ratio of cardholders to ATMs. "[T]here are more ATMs needed to ensure ubiquitous coverage to these new cardholders across the country, especially in semi-urban and rural areas," the release said.

CATMi said that an increase in interchange fees would be needed to fund expansion into these areas.