Constant advances in the regulatory landscape are making it desirable to operate ATMs and may also lead to the closure of half of the 2.38 lakh machines within the country by March 2019, the Confederation of ATM Industry (CATMi) warned Wednesday.
Stoppage of the ATMs would surely impact thousands of jobs and also the financial inclusion efforts of the government, the industry body said in a statement.
“Service providers may be forced to close down almost 1.13 lakh ATMs across the country by March 2019. These numbers include approximately one lakh off-site ATMs and a little over 15,000 white label ATMs,” it said.
The industry has reached a “tipping point”, the body added.
Most of the ATMs can be shut down in the non-urban areas, it said, underlining that this can impact the financial inclusion efforts as beneficiaries use the machines to withdraw government subsidies.
The industry body even said that the recent regulatory changes those include the hardware and software upgrades,coupled with mandates on cash management standards and the cassette swap method of loading cash, will make ATM operations desirable, resulting in the closure.
The new cash logistics and cassette swap method will alone result in costs of Rs 3,000 crore for the industry, it estimated.
It added that the ATM industry, including managed service providers, brown-label ATM deployers and white label ATM operators (WLAO), is still reeling under the shock of demonetisation.
“The situation has further deteriorated now due to the additional compliance requirements that call for a huge cost outlay. The service providers do not have the financial means to meet such massive costs and may be forced to shut down these ATMs,” it said.
The only way to salvage the situation for the industry, according to the body, is if banks”step in to bear the load of the additional cost of compliances“.
“Unless ATM deployers are compensated by banks for making these investments, there is likely to be a scenario where contracts are surrendered, leading to large scale closure of ATMs,” it said.
Due to low ATM interchange charges and the ever increasing costs, the revenues required for providing ATMs as a service aren’t growing it said, adding that such changes in the landscape were not anticipated while signing contracts with the banks.
The WLAOs have accumulated the losses and the compliance expenses can inturn result in more than 15,000 machines those are run by them shutting down.