Business correspondents' body demands higher charges for AePS withdrawals

Faced with a jump in costs and transaction failures, bank agents are demanding an upward revision of per-transaction charges to 1 per cent or Rs 21, whichever is lower

Fifteen years after the Aadhaar-enabled Payment System (AePS) was rolled out, the Business Correspondent Federation of India (BCFI) is pitching for increasing the cost of such transactions by 50 basis points. 

The BCFI, which is the national body for banks' so-called business correspondents (BC) who serve under-serviced areas, is arguing for upping the pricing of AePS transactions to one per cent of the ticket size or Rs 21, whichever is lower. The current price stands at 0.50 per cent of the transaction or Rs 15 (whichever is lower). BCFI has raised the matter with the Reserve Bank of India as well as the National Payments Corporation of India (NPCI). The NPCI operates the AePS, as well as UPI services, among others.  

Additionally, the Business Correspondent Resource Council in September this year wrote to the Ministry of Finance on the need for an upward revision in the commission paid to agents, setting up of an annual pricing review committee, and a re-look at the penalties imposed by banks on BCs. 

 

Rising costs, transaction failures 

 

BCFI’s argument is that the cost structure of BC outlets – typically kirana stores – have gone up, be it rentals or the pricing of devices that enable AePs transactions which enable cash-in cash-out (CICO) across the country.  

Another pain point for such transactions is the rate of transaction failures. A collaborative study in 2020 by Dvara Research, and the Centre for Monitoring Indian Economy on access to cash and coping mechanisms employed during the pandemic found that 46 per cent of households who faced difficulty while withdrawing cash from their accounts cited transaction failures. Besides the obvious anxiety and uncertainty for customers, it also results in tangible costs to the system.  

“Besides lost wages and travel costs, when a successful debit does not translate to a completed transaction, customers must wait for automatic reimbursement, the timing of which is typically not within the same day, adding further inconvenience,” the study said. 

 

ATM fees still below 2012 levels 

 

The clamour for revision in AePS charges comes even as a fresh look at the automated teller machine (ATM) channel’s cost structure is on the cards. In the offing is a hike in the interchange cost to Rs 20, with the possibility of an additional convenience fee for higher cash withdrawals even as differential pricing for customers in under-penetrated centres may be under consideration. The so-called interchange is the fee charged by a card-issuing bank when a customer swipes at other banks’ ATMs, including on white-label ATMs. The interchange fee was raised to Rs 17 from Rs 15 (and to Rs 6 from Rs 5 for non-financial transactions), effective August 1, 2021. But the current interchange at Rs 17 is lower than the Rs 18 in 2012, when it was cut to Rs 15. 

  

 

BCFI’S KEY DEMANDS 

• Upward revision in pricing of AePS transactions from one per cent of the ticket size or Rs 21 whichever is lower, from 0.50 per cent or Rs 15 (whichever is lower) 

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• Cost structure of business correspondents (kirana stores) has changed 

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• Rentals and pricing of devices that enable AePs transactions have increased