Withdrawing Cash To Become Twice As Difficult? 50 Per Cent Of ATMs May Shut Down By March 2019, Over Rising Costs

The automated teller machine (ATM) industry has announced that by March 2019, 50 per cent of the ATM’s might get shut down, as reported by Livemint.

Radha Rama Dorai, managing director of ATM and Allied Services, FIS, said that the long-term profitability and sustainability of the ATM industry is looking tough. The operating costs and compliance costs have increased.

He said that the only way to make sure the shutdown won't affect the already low penetration in India is to make the ATM ecosystem sustainable. This can be done by renegotiating the existing servicing contracts and through a mutually agreeable costing model.

There are three types of ATM’s - banks deployed inventory, an outsourced model where ATM companies managed the services and ATMs led in smaller cities.

Dorai says that the last model is under severe threat due low usage. This model requires the cash van to have different configuration and security parameters, which will get expensive.

All ATM’s has four cassettes of different denominations, which then based on the average user, are loaded with cash. But the RBI now wants the ATM industry to provide a warehouse of cassettes which is predefined for the denomination. A private bank official said that it would cost a lot to create that inventory.

The bankers and ATM providers though are of the opinion that demand for cash is still there, despite many steps taken by the industry for electronic transactions. The convenience of dealing in small amounts is always better in cash, says a banker.