National ATM platform still a dream

Shared networks yet to join RBI-promoted national financial switch

The Reserve Bank of India (RBI) promoted National Financial Switch (NFS) has remained unsuccessful in its mission to become the central platform for shared ATMs.

Shared ATM networks set up by groups of banks - Cashnet, Cashtree, Mitr and Bancs - are hesitant to join the NFS network as they view it as a competitor.

The sufferers are bank customers as they are deprived of a common charge for card usage at ATMs other than those of the card-issuing bank. Over 97 per cent of card transactions are dealt at ATMs of card issuing banks, with only balance being dealt on ATMs of other banks.

RBI's Institute for Development and Research in Banking Technology (IDBRT) set up NFS about a year ago with the aim of becoming a hub for ATM networks.

NFS becoming a mother platform for ATM transactions at reasonable cost remains a distant dream.

R Gandhi, director-in-charge of IDBRT, said "We want to dispel the impression that NFS was competing with other ATM networks. IDBRT is not in the commercial space and provides NFS as a community service."

IDBRT also recently cut NFS charge to Rs 9 from Rs 20 per transaction to entice other ATM networks to come on board. This still does not seem to be working.

ATM transaction charges range up to Rs 50 per and there was no information easily available to bank customers. That makes customers to stick to the ATMs of their own banks.

"There has to be a balance between costs and benefits for the card issuer and the acquiring bank to join NFS," said S Rao, Director (sales) of Euronet, which manages Cashnet ATM network.

Bankers said a bank, which has a large network of ATMs, would like to recover its investments and, hence, it would not be prudent to pass on lower cost benefit to customers of other banks.

At present, over 15 banks including Punjab National Bank are connected to NFS and record about 12,000 transactions per day. Over 97 per cent of transaction are done at ATMs of card-issuing banks.

An Indian Banks' Association official said the idea of sharing resources to reduce costs and use a platform for business benefits was sinking in gradually.

Initially, large banks such as SBI and ICICI Bank set up ATMs to have closed user network. Later they forged bilateral agreements for sharing networks. Now they are moving to broader platforms, like a shared network, the official said.

"When NFS was launched last year, the involvement of RBI in NFS will ensure participation from all banks. The high transaction charges dithered participation. Now that NFS has decided to slash rates the committee of Cashtree group of banks would take a fresh view on NFS," said an official of Union Bank of India, a member of Cashtree.