A fall in ATM footfalls is forcing banks, especially private banks, to seek an increase in inter-bank transaction charges - a move that could potentially increase the burden on those who are more dependent on ATMs for daily needs.
The Narendra Modi government's digital push, which gives prominence for cash-less transactions combined with banks' move to impose charges of ATM cash withdrawals beyond a maximum five times a month, has also helped to slow down ATM use by bank customers.
Banks are demanding a raise in interchange fees for ATM transactions, citing demonetisation, an increased cost of operating the channel, and fewer withdrawals.
For one thing, a fall in the number of transactions automatically increases the cost of operating automated teller machines (ATMs) for banks as they have to bear a fixed cost for keeping these machines running.
Interchange fee is what banks pay each other for the use of other banks' ATMs by their customers.
Reports citing banking sources said the National Payments Corporation of India (NPCI) has held separate discussions with public sector and private sector lenders on the issue.
While most private sector banks are demanding a hike in interchange rates, some large public sector banks are reported to be against the increase, saying this could add to their costs.
''We also said that our charges are very high and if you increase the fee, public sector banks are bound to lose due to cost escalation as they are the net issuers. We not only issue normal debit cards but also Rupay cards. In this case, they (NPCI) are finding out the costs that are being incurred by public sector and private sector banks. And after ascertaining the costs they will discuss with all stakeholders and decide the rate,'' one banker was quoted as saying.
Sources said private sector banks stand to gain from a hike in interchange rates as they enjoy location advantage because of their early start.
However, the cost of operating ATMs has gone up due to additional security requirements and the need for recalibration of machines following the issue of new currencies post demonetisation, they added.
Besides banks, non-bank entities that have set up white label ATMs have also sought a hike in interchange charges.
They have also made representation to the Reserve bank of India (RBI) with all facts and figures to emphasise the need for an increase I interchange fee to at least Rs18 from the current Rs15, which, they say, is not sufficient to cover costs.