Mumbai
In this era of the digital age, on the one hand, the cashless transaction is making its rapid place and making people’s life easier. On the other hand, people are now reducing the use of ATM along with cash. The most prominent reason behind this change is the rise of UPI payments. The transaction through UPI i.e. Unified Payments Interfaces has become easier and intensified, which has reduced the need for cash withdrawal.
The trend of digital payment in the country is increasing rapidly. Due to which the use of ATMs has declined. The RBI associated with this has also published a report.
The number of ATMs in India is steadily declining
According to data released by RBI, there has been a huge decrease in the number of ATMs in the country. The number of ATMs in India has come down from 219,000 in September 2023 to 215,000 in September 2024. This decline is mainly due to a decrease in off-site ATMs. These ATMs fell from 97,072 in September 2022 to 87,638 in September 2024.
Due to decrease in the number of ATM
Minister of State for Finance Pankaj Chaudhary said in the Lok Sabha that public sector banks have given several reasons to close ATMs. These include integration of banks, low use of ATMs, lack of commercial benefits and transfer of ATMs. Bankers say that the increasing trend of digital payments and the emergence of UPI has reduced the use of cash, making ATM operating impractical.
UPI’s increasing dominance
There has been a significant increase in digital payments and financial inclusion in the last nine years. The spread of Jan Dhan Yojana, Mobile Internet and UPI has promoted this change. UPI transactions have increased by 25 times in the last five years. While 535 crore UPI transactions took place in the financial year 2018-19, it increased to 13,113 crore in 2023-24. This financial year (till September), more than 8,566 crore transactions worth Rs 122 lakh crore have been recorded through UPI.
Steps towards Digital India
Consumers are now using UPI for vegetables to auto rides and expensive shopping. This digital revolution has rapidly increased India from cash to digital payments.
Why ATM is decreasing
According to media reports, digital payment has been emphasized in the country for a long time. Digital payment is also very easy to people, so in a short time it has become very popular in the whole country. UPI also has a big role in the number of decreasing ATMs of banks. The popularity of ATMs has decreased significantly for some time. ATM access to people is still low, according to reports, there are only 15 ATMs per 100,000 people in the country.
Effect of RBI rules
Cash in the country still plays an important role in India’s economy. In FY 22, 89% transactions and 12% of the GDP were in cash transactions. But the RBI rules on ATM transactions and interchange charges have made a profound impact on the ATM. According to a report by the Economic Times, this change is inspired by digital payment especially the increasing popularity of UPI and strategic focus on digital changes.
Let’s first take a look at the history of automated Teller Machine- ATM:
The first ATM in India was installed by HSBC in Mumbai in 1987. In the next 10 years, about 1500 ATMs opened in the country by 1997. If we talk about the first ATM in the world, a cash machine was used on 27 June 1967 in Enfield, London, which is recognized as the world’s first ATM. This ATM was started by Barclays Bank. During the 80s, ATMs joined the mainstream in many big countries of the world.
After this, in 1997, the Indian Banks Association (IBA) launched the first joint ATM network from the ‘Swadh’, which was operated by the India Switch Company (ISC). However, it closed in 2003. It was followed by the establishment of the National Financial Switch (NFS) in 2004, which is today the largest ATM network in India, which the National Payments Corporation of India (NPCI) operates.
Today there is so much ATM in India
As of January 2022, India had over 2,55,000 ATMs under the NFS network, including cash deposit machines and recycles. Based on data from Reserve Bank of India (RBI) and NPCI, India was estimated to be around 2,60,000 to 2,70,000 ATMs by 2023. Currently, there is a possibility of about 2.8 to 3 lakh ATMs in India. At present, there are 15 ATMs on one lakh people in the country. SBI is the largest operator based on the number and impact of ATM, but cash management dominates CMS.
How many ATMs have been closed so far in India…
According to RBI data, the number of ATMs in India was 2,19,000 in September 2023, which declined to 2,15,000 in September 2024. This means that about 4 thousand ATMs closed during this period. Not only this, since the year 2017, the increase in the number of ATMs has slowed down, and its scope has increased from year to year. Especially since 2022, the number of off-site ATM (located outside the bank premises) has steadily declined. This is due to increasing use of digital payments (eg UPI), high cost of ATM operations, and merger of bank branches.
Why are ATM closing?
That is, everything depends on the customers, if the ATM is used a lot, then the business will not run in losses, while if an ATM does 300-500 transactions in a month, then it can also go into losses. This bitter is true, the use of ATM in the country has decreased rapidly. Because most people are using digital payments (UPI), which also closed some ATMs. According to the RBI, in 2023, India had an average of 50–100 transactions per day, which ensures sufficient income for the operator.
There can be many reasons for ATM going into losses, which are associated with technical, economic, and social factors.
Methods of earning from ATM:
The use of ATM is decreasing due to digital transactions, so companies associated with it are running in losses. Actually, ATM earns in many ways, which depends on who is operating the ATM- bank, white-labeled ATM operator (Wlas), or a third party.
Where do you earn from where?
1. Interchange fee
When a customer withdraws money from the ATM of a bank other than his bank, his bank pays that ATM Honor (operator) a small fee. This is called interchange fee. According to the RBI, Rs 17 per cash withdrawal and Rs 6 per non-cost transaction (such as balance check) charge is paid to ATM operator. For example, if 1000 people use an ATM to another bank card in a month, then ₹ 17 x 1000 = ₹ 17,000 can be earned.
2. Service Charge/Surcharge
According to the RBI circular, customers get 5 free transactions from their bank’s ATM and 3 free transactions from ATM of other banks (in metro cities) every month. On more transactions, the bank charges charge from customers. Every transaction is charged 20 to 21 rupees.
3. Earning from advertisement
Apart from this, additional income can be made by showing advertisements on ATM screen or branding on the outer part of ATM. Some ATMs offer services like mobile recharge, bill payment, or mini statement, on which commission is available. It depends on the number of service and transactions, but is charged from 2 to 10 rupees per transaction. Apart from this, banks add cash to their ATM, which reduces customers to go to the branch. This saves the operating expenses (employee, time) of the bank. Although this is an indirect earning, but it earns large earnings, that is, savings.
ATM Operations: Cost vs.
There is a loss in any business only when there is an amount of more cost than earning. Currently, something is happening with ATM business. There is more cost, but the income is decreasing day by day.
-2-5 lakh rupees for installing ATMs. (Machine, software, installation)
– Maintenance: Spending from Rs 20,000 to Rs 50,000 every month on electricity, security, cash filling, and repair.
– If the ATM is at the place of rent, then the monthly rent of 10 to 20 thousand rupees.
Missing and cost of banks
After the merger of public sector banks, many banks are closing the additional ATMs present in the same area, so that the cost is reduced. Due to this, the total number of ATMs is decreasing or decreasing. But pressure on existing machines is increasing.
How does ATM operate?
ATM service and earnings in India depend on who is operating the ATM- bank, white-labeled ATM operator (WLAS), or a third party.
White-Lable ATM (WLA) model
In India, WLA operators like Tata Communications, Hitachi Payment Services and Vakrangee run ATM. These are not banks, but these banks deals and operate the ATM.
India 1 Payments: Earlier Tata was known as Communications Payment Solutions. It is the largest WLA operator in India, which has 10,000+ ATMs. Rural areas are more ATMs. Thousands of ATMs are operated under Hitachi Payment Services. It also provides technical and management services.
White label ATM operator (WLAOS) spent more than Rs 1000 crore to install more than 25,000 ATMs. But due to low transactions, they are also in loss. However, big banks like SBI are still able to make profit due to their huge network and market share.
AGS Transact Technologies: It is also a major WLA operator, which offers ATM as well as payment solutions. Whereas Vakrangee provides ATM and banking services in rural areas.
FSS (Financial Software and Systems): Manage ATM network for many banks, including site selection, maintenance and monitoring.
Companies associated with ATM operating and cash management in India come in two different categories. ATM operators- ATM manages the network. Cash replenished companies- ATMs work in pouring cash. Some companies do both work.
Major companies operating ATM in India
State Bank of India (SBI): The largest ATM network in India is SBI, by the year 2023-24 there were 65,000 more ATMs in the country. SBI operates its machines itself and holds about 30% of the market.
HDFC Bank, ICICI Bank, PNB, BOB: These big private and public banks operate their ATM networks. They have thousands of ATMs, which are mainly for their own customers.
Major Cash Inserts (Cash Reporters):
CMS Info Systems: The largest cash management company in India, which serves 2,55,000+ ATMs. It works as a cash, maintenance and safety in ATM.
SIS PROSEGUR: Cash-in-Transit (CIT), ATM Reporting and First Level Maintenance (FLM). It serves in all states.
The company started drowning due to decrease in ATM business
The ATM business has reached the verge of drowning due to losses in ATM business. All the big officials are resigning. The IPO of this company came in the year 2022, and till a few years ago the company had a great business. But for the last few months, the company is constantly struggling with the economic crisis.
The shares of AGS Transact Technologies have lost up to 60 per cent in the last one month, while 90 per cent shares have fallen in a year, the stock has been continuously lower circuit for the last several weeks. That is, the company has been ruined financially. At present, the price of the share has fallen to Rs 7.
