Charging customers for ATM usage
Introduction:-
On most modern ATMs, the customer is
identified by inserting a plastic ATM card with
a magnetic stripe or a plastic smart card with
a chip that contains a unique card number
and some security information such as an expiration date or CVVC (CVV). Authentication is provided by
the customer entering a personal identification number (PIN).
The newest ATM at Royal Bank of Scotland operates
without a card to withdraw cash up to [1]
Using an ATM, customers can access their
bank accounts in order to make cash withdrawals, debit card cash
advances, and check their account balances as well as purchase pre-paid mobile
phone credit. If the currency being withdrawn from the ATM is different from
that which the bank account is denominated in (e.g.: Withdrawing Japanese Yen
from a bank account containing US Dollars), the money will be converted at an
official wholesaleexchange rate.
Thus, ATMs often provide one of the best possible official exchange rates for
foreign travellers, and are also widely used for this purpose.
Discussion:-
1.
Stating that its ATM operations
are making losses, nation’s largest bank SBI has said it is all for charging
customers for transactions. It also said a commercially viable model is needed
for ATM network expansion.
“Whatever
services we give, ultimately it has to be a win—win situation.... We just want
a commercially viable model, I cannot afford to lose month after month,” State
Bank of India (SBI) Chairperson Arundhati Bhattacharya told PTI in an interview.
SBI is having the largest network of ATMs.
Ms. Bhattacharya
also said barring in a few states, the ATM operations are making losses. She
did not name the states where the ATM segment is making money. She said SBI
cannot subsidise ATMs forever.
“The loss from
ATMs is very concerning. I would like to roll out many more ATMs. I am ready to
do that, but I need to explain also how I am going to sustain this,” she said.
When asked about
the industry demand that customers be charged for ATM services, especially
after the push in costs of ATMs after the Bangalore incident wherein a woman
was attacked inside the ATM kiosk, she said SBI supports the idea of charging
even its own customers.
“If you are
looking at extending the ATM network and making it available to more and more
people, there has to be a commercially viable model,” she said.
SBI had an ATM
network of 32,777 as of September 2013 and has already announced aggressive
plans of expansion. The Finance Ministry had mandated that each state-run bank
would have an adjoining ATM in place by the end of the current fiscal.
At present,
banks allow customers five free transactions per month at other banks’ ATMs and
unlimited at own bank’s. However, the home bank has to pay the other bank Rs 15
per transaction, even though the transaction may be for free to customers.
2.
MUMBAI: Senior finance
ministry official has said that they are not in favour banks charging
their own customers forATM services
as suggested by bankers lobby - India Banks' Association - since this they will
only increase the cost of servicing the customer at the branch level.
Speaking to media at,
secretary, financial
services Rajiv Takru said
that finance ministry would prefer ATM services to be free. "If banks make
these services expensive then customers will probably end up at the bank
windows. A teller service is far more expensive than ATM service," he said.
3.
MUMBAI: HDFC Bank has said that it is not inclined to charge
its own customers for
ATM transactions and will not do so unless there is an industry level decision
that has a bearing on the bank. The stand is contrary to the one taken by the
country's largest lender State Bank of India which supports introducing charges
even for customers using their home bank ATMs beyond a point.
Speaking to newspersons after announcing the bank's results, PareshSukthankar, deputy MD, said that from the outset the bank had taken the stance that it will not charge its customers forATM use. He added that the bank was unlikely to make a unilateral move towards a structure where own customers are charged. "This is something that is being discussed at various levels and the discussion also includes the charges for using other banks' ATMs."
He added that if a general feeling among banks evolves that it is better to have a small charge on all transactions rather than a higher increase on use of other banks' ATMs, HDFC Bank may have to be part of the decision.
Speaking to newspersons after announcing the bank's results, PareshSukthankar, deputy MD, said that from the outset the bank had taken the stance that it will not charge its customers forATM use. He added that the bank was unlikely to make a unilateral move towards a structure where own customers are charged. "This is something that is being discussed at various levels and the discussion also includes the charges for using other banks' ATMs."
He added that if a general feeling among banks evolves that it is better to have a small charge on all transactions rather than a higher increase on use of other banks' ATMs, HDFC Bank may have to be part of the decision.
The industry is split on
the issue of hiking charges on transactions on third-party ATMs. On one side
are the 'net issuers', or banks who end up paying for their customers using
ATMs of other banks. The other set of banks are the 'net acquirers', or those
banks who earn a revenue from customers of other banks using their ATMs. Most
private banks are net acquirers while public sector banks are net issuers.
SBI group, despite having
an ATM network of over 40,000, is a net issuer since the group has a debit card
holder base of 15.47 crore cardholders. The Indian Banks' Association (IBA) has
proposed that the present limit of five free transactions per customer should
include transactions in the home bank's ATMs.
All banks want a revision
of ATM charges, but issuing banks fear that if only transactions on other
banks' ATMs are hiked, they will end up losing even more. SBI chairman
Arundhati Bhattacharya said that barring a few states, SBI was losing money on
its ATM network.
4.
Free withdrawals at ATMs
may soon become a thing of the past. To make good the expenses incurred on
beefing up security, banks are considering levying a charge on all ATM
transactions, be it a cash withdrawal or a balance enquiry.
With the police in various
States insisting that ATM kiosks have security guards 24x7, CCTV cameras inside
and outside the kiosks, and video footage to be preserved for at least six
months, bankers say the costs will more than double.
The security concerns have
been triggered by the recent lethal attack on a woman customer in an ATM booth
in Bangalore. Most of the over 1,00,000 ATMs in the country neither have
round-the-clock guards nor surveillance cameras.
Currently, all transactions
by customers at their bank’s ATMs are free. The first five transactions in a
month at other ATMs are also free.
“Hiring trained
guards for three eight-hour shifts, procuring arms licences, installing cameras
inside and outside the ATM and connecting alarms to the nearest police station
will have huge cost implications for banks,” said a senior public sector bank
official.
Discussions
on fee
Banks are now in
discussions with the Indian Banks’ Association (IBA) to arrive at the fee to be
levied and the modalities relating to enhancement of security.
Further, to cut costs,
they are also considering the feasibility of having operational hours, say from
8 a.m. to 8 p.m., for some ATMs, which either do not have footfalls at night or
are in locations that are sparsely populated.
“We are all working on the
modalities through the IBA. There are issues, such as competition and ATM
spread, which have to be taken into consideration before arriving at a
decision,” R.R. Sharma, Chief General Manager, Canara Bank, told Business
Line on Wednesday.
According to initial
estimates, the cost per transaction works out to Rs 6 on the basis of an
average of 200 transactions in each of the 100,000-plus ATMs across the
country, Sharma said. However, the individual cost structures for banks might
wary.
“But definitely, it will
be a significant cost for banks, which can impact profitability. Every branch
should have an ATM and there are some ATMs that are not frequented by many
customers. Providing security at these would be expensive,” said M. Anjaneya
Prasad, Executive Director, Syndicate Bank.
BIG BURDEN
Banks are worried. If the
100,000 ATMs have 20 million transactions a day that means 600 million
transactions a month.
So, if each transaction
costs Rs 6, the total expenditure for banks would be Rs 360 crore a month. If
the proposal goes through, this cost would have to be borne by customers.
Imposition of any fee
would mean the end of free ATM usage for customers. “Already we just have five
free transactions in ATMs of other banks. While this itself is not justified,
how can we be made to pay for security at ATMs?” questioned H. Phaneedra, a
customer.
Bankers are, however,
hoping that the Reserve Bank of India will give its nod to levy charges on ATMs
transactions.
Conclusion:-
If bank should
charging for ATM usage then the customer
should more visit to bank because of withdrawing money from bank and bank work
should be more, the bank people has work
load should be increase .
Bank should increase limit withdrawing money from the ATM machine if
the limit increase then people should use their ATM efficient and effective
way.
Always bank should charge for ATM maintain fee annually from the
customer , So bank should has chance to charge more money for ATM maintain.
If bank charge for ATM usage then bank should more provide security
to the ATM.
Today our country is developing country, the people want to use more
technology, in technology time the people does want to take more notes to their
pocket they know if they have more note their pocket then it may chance for
theft.
So, my view the bank should does not charging customers for ATM
usage.
Submitted by:
Moushmi
Roll no.: 1273578
No comments:
Post a Comment