Moushmi Kumari, 1273578,F1, Q48-Charging customers for ATM usage

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 

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 If the currency being withdrawn from the ATM is different from that which the bank account is denominated in (e.g.: Withdrawing Japanese Yen from a bank account containing US Dollars), the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.

http://www.thehindu.com/business/Industry/sbi-supports-charging-customers-for-atm-usage/article5569850.ece

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.

http://articles.economictimes.indiatimes.com/2014-01-23/news/46514283_1_own-atms-atm-service-enough-competition-and-banks

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. 

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.

http://timesofindia.indiatimes.com/business/india-business/HDFC-Bank-against-charging-own-customers-for-ATM-use/articleshow/28971451.cms

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.

http://www.thehindubusinessline.com/industry-and-economy/banking/banks-may-soon-begin-charging-customers-for-atm-usage/article5452421.ece

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