Firstly, the ATM industry had a direct impact of demonetisation, which took place in November 2016, causing a fall in profitability. Along with that, the ATM industry had the added burden of compliance which the Reserve Bank of India (RBI) had imposed on them for security.
“Initially, no one was willing to take the cost burden. However, now there are a number of conversations going on. The NPCI has spoken to the ministry to revise the interchange fee and they have made certain recommendations. We are waiting for the ministry to come back in terms of the decision. We don’t know how much time will it take but we know that NPCI has made the recommendation which is a good starting point," said Himanshu Pujara, regional managing director, Asia Pacific, Euronet Services India.
This is the wait and watch period and at negotiation stage. “If the negotiated rate is not good enough then we will have to see. We are hopeful that banks will reimburse for the increased ATM cost and we in turn will be able to pay the cash loading agencies. I am expecting things to work out well," said Radha Rama Dorai, managing director-ATM and Allied Services, FIS.
ATM operators demand for higher interchanged fee, the cost levied by ATM operators per transaction. “There is an effort made by the white label ATMs for an increase in interchange and also supported by banks that acquire a lot of transactions but it is still under discussion. If there is an increase in interchange fee it will go up by 10-15%. Since the cash supply has improved, the profitability is improving," said Dorai.