Interoperability of CRMs

With cash deposit interoperability, a customer of one bank can deposit money in another bank or WLA-operated
CRM using a debit card or just by entering his account details. Accordingly, the customer need not look for an
ATM of his card’s issuing bank. In semi-urban and rural locations, cash deposit interoperability has received
good responses due to lower branch penetration. AGS Transact is growing their penetration in Tier 2 and Tier 3
locations, and ATM penetration levels in these areas is expected to improve further, enabling easy access to cash
and a host of banking facilities for the financially underserved. In the coming years, the adoption rate for CRMs.
will likely be high as these CRMs could replace a physical teller in a bank and reduce the margin of clerical
error.

At an interoperable level, public sector banks acquire 45% of the overall transactions, and their issuer
transaction volume is at 69%. Similarly, private banks acquire 41% of overall transactions, and their issuer
transaction share is very low at 27% (Source: RBI Bulletin, April-July 2019).

Implementation of Cassette Swapping in ATMs

In a circular dated April 2018, RBI convened a committee on currency movement to review security of the
treasury in transit. To mitigate risks involved in open cash replenishment/top-up, the committee advised that
banks may consider using lockable cassettes in their ATMs which shall be swapped at the time of the cash
replenishment. It was mentioned in the circular that this may be implemented in a phased manner covering at
least one-third of ATMs operated by the banks each year, such that all ATMs can implement the cassette swap
system by March 31, 2021.

As per estimates, each ATM will require three sets of five cassettes — one set in the ATM, one in transit and
another in the branch/cash-in-transit (CIT) company (ready for loading next day). The cost of each cassette is
approximately 15,000 to 220,000 which will be borne by the banks. The RBI extended the timeline for
implementation of cassette swap in all ATMs until March 31, 2022. With the implementation of the cassette
swap guidelines, cash management companies are expected to increase their fee by an additional 22,500 per
ATM per month. SVIL is one of the few providers to implement the cassette swapping system across multiple
ATM locations in Mumbai, Pune and Bangalore.

Banks have also been asked to monitor progress and make the required course correction at the end of every
quarter and report status to the RBI. As of August 2021, only 1% of ATMs have implemented the cassette swap
feature in their devices, and it is anticipated that only 50% of the ATMs would be upgraded to cassette swap by
the end of financial year 2022.

New Guidelines for Interchange Fee at ATMs in India

The following table sets forth the interchange fee in %, applicable from August 1, 2021:

 

 

 

 

 

Interchange Fee in = August 1, 2014 August 1, 2021
Financial Transaction 15 17
Non-Financial Transaction 5 6
“On-Us’ Transaction Charges* 20 21

 

 

 

 

Source: India ATM Market Outlook to 2026, Ken Research, August 2021.

Note: ‘On-us’ transaction charges are applicable only when the customer avails of their first five free transactions ina month across metro
and non-metro cities. ‘Off-Us’ transaction charges are applicable only when the customer avails of their first three free transactions under
metro city and first five free transactions under non-metro cities.

*On-Us’ Transaction Charges will be applicable from January 1, 2022

In July 2021, the RBI allowed an increase in the interchange fee structure for ATM transactions after almost
nine years, on account of the increasing cost of ATM deployment and expenses towards ATM maintenance
incurred by the banks and white label ATM operators. The RBI’s new directions on raising interchange fees and
making bulk clearing available around the clock took effect on August 1, 2021.

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