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Access to cash from RBI doesn't improve viability of ATMs, say operators

Interchange is the rate charged by the ATM operator for every transaction

Nikhat Hetavkar  |  Mumbai 

Photo: istock
Photo: istock

While white label ATM operators (WLAOs) were allowed to buy directly from the (RBI), the industry says it does not serve the RBI’s intention of “enhancing the viability” of the

Executives said the directive does not address the need to increase interchange rate, which is crucial to ensure the viability of these and encourage opening of more in the country. The number of has stagnated since demonetisation, shows the data.

Interchange is the rate charged by the ATM operator for every transaction. It is decided by a National Payments Corporation of India (NPCI) steering committee, which primarily comprises of banks.

“The primary issue of increasing interchange rate still remains and we hope that the would step in. We have had multiple conversations with the around interchange recently and these guidelines are a result of those conversations,” said Sanjeev Patel, chief executive officer, Tata Communications Payment Solutions (TCPS).

K Srinivas, director of Confederation of ATM industries of India (CATMi) and managing director, BTI Payments, said the directive was positive. “The access to the RBI directly and allowing operators to give value added services, which were two of our four discussion topics with the RBI, have been addressed. The other two topics are increasing the interchange and removing the net worth criteria for WLAs.”


Business Standard had earlier reported that the NPCI had recommended increasing interchange rate from Rs 15 to Rs 17. However, the structure of the NPCI committee is highly skewed towards the public sector banks, who do not want a rise in the rate, as it would raise their costs, said an executive on condition of anonymity.

Since the NPCI is not taking a call on the interchange rate, it is necessary for either the RBI or Ministry of Finance to step in. The interchange is lower than the cost of carrying and has been stuck since six years, Srinivas said.

The industry has also requested the RBI to remove the criteria of having a capital of Rs 1 crore, following which the RBI has put out a consultation paper to the key stakeholders, said a CATMI representative.

An executive said the RBI move has no impact, since it also repealed permission to WLA operators to source from retail outlets with the same circular.

However, another executive said the RBI has nearly 3,800 currency chests and would make it easier to access cash.

BTI payments borrowed 45 per cent of its total cash supply from retail outlets, whereas TCPS borrowed 15 per cent.

The directive will also reduce the WLA’s reliance on banks, which sometimes charge exorbitant rates to buy cash, said Patel. Srinivas said that the WLAs don’t get cash from public sector banks in small towns and had to transport cash from private banks in tier 2 and 3 cities.


  • Interchange rate remains key issue, no development on it
  • White label ATM (WLA) executives want regulatory intervention in interchange conflict
  • WLAs will now have access to over 3,800 currency chests
  • The RBI also repealed access to cash from retail for WLAOs
  • looking to remove capital criteria of ~1 crore, RBI sent a consultation paper

First Published: Sat, March 09 2019. 00:58 IST