by Venkatachari Jagannathan
Banks are opting to set up multi-functional machines like currency recylers, instead of plain cash dispensing automatic teller machines (ATM).
Although the number of ATMs have gone up between September 2016 and 2017, the number of recyclers are on the rise, according to a senior official of the FIS payment solutions and services provider.
"Banks are taking a relook at their ATM channels with under-performing machines being relocated. Old ATMs are also being replaced with newer multi-functional machines like recyclers," Radha Rama Dorai, Managing Director, ATM and Allied Services, told IANS.
According to Reserve Bank of India (RBI), the total number of ATMs installed by banks in the country stood at 2,07,211 at the end of September as against 2,04,062 machines to the same month in 2016. Recycler ATMs are machines that accept cash deposits, give instant credit to an account holder and also dispense the deposited currency to those who withdraw.
The machine also identifies fake or invalid notes that are deposited and retains them. Regular ATMs do not have the technology to identify fake notes while dispensing cash, Rama Dorai said.
There are several instances where ATMs dispensed fake notes putting the public at difficulty and loss. According to her, the cassettes/cash trays in the ATMs need to be recalibrated to stock new currency notes like the Rs 200 bill.
"Most ATMs now stock 2,000/500/100 rupee notes," she added.
The US-based $9 billion Fidelity National Information Services Inc (FIS) is a global major in the financial services technology, with a focus on retail and institutional banking, payments, asset and wealth management, risk and compliance, consulting and outsourcing solutions. It manages over 13,000 ATMs for several Indian banks. The company is one the three top payment processors in India and has over 13,000 employees.
Rama Dorai also said banks are in the process of changing their debit/credit cards to EMV standard cards or chip cards where customer data is stored in an integrated circuit embedded in the card. Traditional cards store the date on a magnetic strip. She said banks have issued tenders for replacement of their old ATMs as also for new machines. The tender also includes certain number of recyclers.
While the total number of ATMs may show an increase, overall there is a bit of slowdown by the banks in putting up ATMs in urban areas. Further, the merger of associate banks of the State Bank of India (SBI) with the latter will result in rationalisation of ATM kiosks, K. Srinivas, Managing Director and CEO of BTI Payments Pvt Ltd, said.
But in rural areas there demand for withdrawals is rising as the government has started paying the subsidy amounts directly to the beneficiaries' bank accounts. Further, more Jan Dhan accounts are being opened. He said the overall ATM transactions are seeing an increasing trend which shows the need of cash has not gone. BTI Payments is a white label ATM player-company that owns and runs ATMs and gets paid from banks on a per transaction basis. It has around 4,600 ATM kiosks.
"The spread of ATMs in rural areas by players like us depends on two aspects -- fee per transaction and interest cost of cash. The fee per transaction has to go up by Rs three to Rs 18. Further, the authorities have to enable us to source cash from places close to ATM installations," Srinivas told IANS.
He said if cash can be obtained from banks near the ATM locations then the cost of transporting comes down. Speaking of recyclers, he said the economics is a bit tricky. It would be viable in locations where deposits and withdrawals are more or less equal. Some banks, he said, were putting up these machines at their branch premises. If the cost of recyclers come down from around Rs 6 lakh, then their viability may go up, he added. A normal ATM costs around Rs 2.5 lakh.
(Venkatachari Jagannathan can be contacted at firstname.lastname@example.org )