Agencies
Mumbai:The National Payments Corporation of India (NPCI) has recommended a hike in the interchange fee for cash withdrawals.
This comes when the cash-management industry is facing a surge in additional costs because of security guidelines issued by the Reserve Bank of India and the ministry of home affairs.
Interchange fee is the amount charged by ATM operators for every transaction.
The MHA guidelines — which include requirements such as GPS-enabled vans, and rules on timing, number of personnel and their training — came into force last week.
However, the industry — which comprises banks, on both the acquiring and issuing side, ATM operators and cash in transit (CIT) companies — are divided over who would bear the additional cost burden.
ATM players have been vocal about the interchange fee being lower than the underlying cost of an ATM transaction, especially because of the compliance cost of the additional guidelines.
Interchange fee is decided by an NPCI steering committee, which primarily comprises banks.
The NPCI had recommended that the interchange fee be increased from Rs 15 to Rs 17.
But the NPCI steering committee was unable to reach a consensus, and members requested the NPCI to seek the department of financial services’s intervention to fix the issue.
The CIT companies demanded an increase of Rs 5,000 for servicing every ATM and had told ATM providers that they would be unable to provide services if the prices are not increased.
However, members of the NPCI committee believed that this request was too highly priced.
The CIT companies would require 90 days to comply with the required changes.
“The net payers of interchange do not want an increase in the fee. Since the decision requires a majority vote, the interchange fee has been stuck at the same rate since six years,” said the executive of a leading ATM service provider.
A regulatory intervention would become essential if the issue continues, he added.
(Except for the headline, this story has not been edited by The Kashmir Monitor staff and is published from a syndicated feed.)
