NEW DELHI – Even as India’s ATM industry struggles to cope with the rising cost of tightened compliance requirements aimed at boosting security standards, manufacturers expect demand for new machines meeting the latest regulatory norms to go up in the country.
The Confederation of ATM Industry, or CATMi, which represents ATM manufacturing and outsourcing firms among other stakeholders, has warned that half of existing ATMs may be forced to close down across India by March due to growing compliance costs.
Currently, India has approximately 2.38 million ATMs, of which nearly half are expected to shut down on account of recent regulatory guidelines for ATM hardware and software upgrades, among other factors, V. Balasubramanian, director of CATMi, said in a statement last week.
In a bid to make ATM banking safer and more secure, the Reserve Bank of India, the central bank known as the RBI, has issued several regulatory orders, including a new standard requiring ATM service providers and their subcontractors to equip cash vans with tubeless tires.
The number of robbery, burglary and theft cases reported by banks operating in India during fiscal 2016 and 2017 stood at 922 and 1,012, respectively, according to government data.
“It’s a major challenge for ATM service providers and other related parties to manage regulatory requirements and also maintain the level of controls up to the requirements of global standards within the changing landscape of technology in the industry,” audit and consultancy firm PwC India said recently in its report on the ATM industry.
These regulatory requirements are likely to force banks to look for new machines equipped with the latest technologies that not only meet all the central bank norms, but also help local banks cut overall ATM management costs, according to manufacturers including Hitachi Payment Services Pvt. Ltd., Hitachi-Omron Terminal Solutions Corp. and Oki Electric Industry Co.
“The costs involved in meeting these regulatory requirements are significant,” said a CATMi member, who is also the chief executive officer of a Japanese firm offering ATMs in India. He requested anonymity.
While hardware- and software-related compliance costs may not be that significant, meeting new compliance norms related to cash management standards will require a lot of money, which will add to the overall cost of operating ATMs, according to the CEO.
“To meet the RBI’s guidelines and to reduce the overall cost, banks in India, which own almost half of India’s ATMs, are already replacing their old machines with new ones,” he said.
“We must not forget the fact that setting up and running ATMs doesn’t come cheap and is not hassle-free,” said Rama Dorai, managing director for ATMs and allied services at FIS, which offers banking and payments technology in India.
“The ideal road ahead to make the ATM management ecosystem sustainable is through a model of mutually agreeable costs while renegotiating the existing servicing contracts,” Dorai added.