A committee has been set up by RBI to review the ATM interchange fee. Based on the recommendation during the second bi-monthly monetary policy, the committee has been formed. The existing structures and patterns of costs, charges and interchange fees for ATM transactions, the overall patterns of usage of ATMs by cardholders and the impact on charges and interchange fees, the entire gamut of costs in respect of the ATM ecosystem will be reviewed by RBI.
Accordingly, it will make recommendations on the optimal charge and interchange fee structure and pattern.
The committee will require submitting its report within two months from the date of its first meeting. The RBI has recommended certain security features for ATMs such as cash replenishment only with digital one-time combination (OTC) locks, grouted structure and comprehensive e-surveillance mechanism at the ATMs to ensure timely alerts and quick response.
The interchange fee is likely to be revised upward. Himanshu Pujara, MD, Euronet Services India Pvt Ltd said, “Interchange fee is always an interbank fee. It is paid by the issuing bank whose cardholders use the ATM of another bank —the acquiring bank. There is no real fee that is passed on to the consumer. Of course, the customer pays if she crosses the number of free transactions, which is three in metros and five in non-metros.”
However, ATM service providers say the impact will not affect consumers immediately considering the country is looking at promoting digital transactions. “As a consumer, you will not see a major impact if there is a revision in the interchange fee. Some day the cost will have to get passed on to the consumer. We all had subsidy in petrol and we were paying Rs 40 and overnight it changed to Rs 70. We can’t live in the economy of subsidy for too long.
If there is a convenience, customer has to pay for it. The only reason they might not pass on to the consumer now is because they want to promote digital transaction,” said V Balasubramanian, president, Merchant & Terminal Business, FSS.