RBI plans on ensuring ATM security contingent to banks’ funding: CATMi

The cost of compliance, especially for WLAs, may put the already-stressed operators into further viability turmoil

The Confederation of ATM Industry (CATMi), while welcoming the Reserve Bank of India (RBI) notification dated 21st June mandating control measures for ATMs, has proposed that the banks should bear the additional expenses on security for all ATMs branded in bank’s name.

According to CATMi, recent compliance-related directives such as the Cash management/logistics, Cassette Swap etc. asks for sizable investments that may account for up to 40% of the cost of ATM machines.

Highlights:

  • The Reserve Bank of India (RBI) issued notification dated 21st June mandating control measures for ATMs.
  • ATM growth in the country is already at standstill whilst the card issuance continues aggressively powered by PMJDY and other Government initiatives.
  • WLA operators are the only entities deploying ATMs in underpenetrated rural areas.
  • CATMi proposed that the RBI should take all stakeholders including banks and ATM service providers into consideration to find out the way forward to ensure compliance to the newly announced measures.

 

The ATM industry association also made a case for White Label ATMs (WLAs) or ATMs that are owned by private operators and not banks. It called for an increase in the prevailing interchange rate to enable such ATM operators make such sizable investments in future.

CATMi spokesperson and BTI Payments Pvt. Ltd CEO K Srinivas explained, “WLAs today are on a very weak viability structure as the cost of transactions are way higher vis-à-vis the interchange fee the operators receive. The cost of compliance, especially for WLAs, may put the already-stressed operators into further viability turmoil.”

“WLA operators are the only entities deploying ATMs in underpenetrated rural areas. 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,” he added.

ATM growth in the country is already at standstill whilst the card issuance continues aggressively powered by PMJDY and other Government initiatives. Banks especially PSBs are in a rapid shut-down spree on ATMs. As a result of these, the debit card to ATM ratio has spiked; meaning there are more ATMs needed to ensure ubiquitous coverage to these new card holders across the country, especially in semi urban and rural areas. These investments, whilst good for the industry as a whole, need to be funded in the form of an increase in the interchange fee paid by the card issuers to the deployers of ATMs, else we will continue to see a lull in expansion of the much needed ATM network in the country,” said Lalit Sinha, Director General, CATMi.

CATMi proposed that the RBI should take all stakeholders including banks and ATM service providers into consideration to find out the way forward to ensure compliance to the newly announced measures.

The Confederation of ATM Industry (CATMi) is a registered non-profit trade association formed by leaders in the ATM industry to create an environment conducive to the growth of the modern ATM industry in India. CATMi is dedicated to promote the interests of the ATM industry through combined and concerted efforts of liaison with government regulators and financial institutions and also addressing the needs of all banks and their customers in India The association’s efforts centers around promoting ATM growth, usage and convenience nationally, advocating best industry practices and bringing latest innovations and technologies to the ATM industry.