ATM Fee

Levying of fee on ATM transactions appears imminent, thanks to the need to provide security at ATMs. As on November last year, there were 1.37 lakh ATMs in the country. Apart from adding to the customer convenience by facilitating withdrawals round the clock, the speedy expansion of ATMs in the last one decade has business implications for banks as well. Currently, bankers say transaction at a branch costs about Rs 40 as against Rs 20 through an ATM. So, these automated teller machines are a win-win for banks and customers.

 

But with the spread of online banking and debit cards, ATM transaction costs now fall between branch-based ones and online banking. The cost of an online transaction is estimated at Rs 4-6 for small banks. According to a senior official of a leading private bank, IT systems would soon help banks to completely waive transaction costs for online banking. So, loss/profit of ATMs should be judged in relation to the other channels and not independently. Providing security at ATMs would mean an additional cost of about Rs 70,000 per month on each ATM, which is truly prohibitive for banks. A solution suggested for this is levying a fee after a couple of free transactions every month. According to reliable sources, imposition of a fee of Rs 20 beyond five free transactions is being examined.