Poor revenue and rising costs to force shut 1.13 lakh ATMs: CATMi

Chennai: Half of existing 2.38 lakh ATMs across country will down shutters due to unviability of operations by March next year, the Confederation of ATM Industry (CATMi) has said.

This would rended service providers to potentially close down almost 1.15 lakh ATMs across the country, mostly concentrated in the rural and semi-urban areas of the country.

“These numbers include approximately one lakh off-site ATMs and a little over 15,000 white label ATMs. Currently, the country has approximately 2.38 lakh installed ATMs, as per the latest publicly available figures,” the apex body of the domestic ATM industry said in a statement.

“If this happens, the financial inclusion programme would be severely impacted as millions of beneficiaries under the government’s Pradhan Mantri Jan Dhan Yojana (PMJDY) scheme, who withdraw subsidies in form of cash through ATMs, may find their neighborhood ATM shut,” the statement pointed out.

As per CATMi estimates, several hundred thousand jobs ride on this industry and the closure of ATMs may result in considerable job losses that would be detrimental to financial services in the economy as a whole.

“The forced closure is on account of unviability of operations brought about by recent regulatory guidelines for ATMs hardware and software upgrades, recent mandates on cash management standards and the Cassette Swap method of loading cash,” CATMi said.

CATMi said that its members, which include the ATM managed service providers (MSPs), brown-label ATM deployers (BLAs) and White Label ATM (WLAs) operators, are already reeling under the financial impact caused by huge losses during and post-demonetisation as cash supply was impacted and remained inconsistent for months.

The situation has further deteriorated now due to the additional compliance requirements that call for a huge cost outlay at the moment when service providers do not have the financial means to meet such massive costs. The situation can be averted if banks pledge to help service providers with the costs.

CATMi added that revenues from providing ATMs as a service are not growing at all due to very low ATM interchange and ever-increasing costs. The body estimates an additional outlay of about Rs 3,500 crore – only for complying with the new cash logistics and cassette swap method.

These requirements were never anticipated by the industry participants at the time of signing contracts with the banks. Many of these agreements were inked four to five years ago when no such requirements were in sight. These compliance costs may also see the 15,000-plus WLAs going out of business, it further said.

NT Bureau