Facilitators want ATM fee to stay

Mumbai: The Indian Banks' Association's proposal to slash interoperability charges on micro ATM transactions to 90% has provoked sharp reaction from business correspondents, who facilitate these transactions at the ground level, to the effect that it has the potential to kill the entire business and jeopardise the government's financial inclusion push. As per current norms, interchange is fixed at 1% of every transaction, with a lower limit of `5 and upper cap of `15.

In a letter addressed to the Reserve Bank of India and the finance ministry, the Business Correspondents Federation of India has asked the regulator to prevent the IBA from initiating such a move.

“We have recommended that regardless of the interchange fees decided on AEPS (Aadhaar-enabled payment system) transactions, banks should continue to pay the existing fees to BCs and introduce a locking period of two years before changing the pricing structure,“ said a Mumbai-based BC.

In the letter, a copy of which has been seen by ET, the lobby group of business correspondents, or bank mitras as they are called, has said banks should treat micro ATM withdrawals on par with fullservice ATMs and introduce three free ATM transactions a month. “Micro ATMs work exactly like ATMs but through biometrics, hence after the first three transactions banks could start charging `20 from the customer, who in turn will become more aware (about using less cash),“ the letter said.

The federation said that a micro ATM will become unviable for the bank that deploys the machine as its cost will be more than its revenue for transactions from different bank account holders.“Banks will never encourage use of micro ATM for other banks as they will earn 0.1% from AEPS interchange and will have a payout of 0.5% to 1% (as charges) for BC agents,“ the letter said. The proposed cut will drastically reduce card transactions of other banks and defeat the purpose of installing micro ATMs.