There has been widespread debate at and criticism from consumer forums on the recent Reserve Bank of India directive regarding ATM usage charges. The decision to allow banks to charge customers if they use their own bank ATM more than five times, or non-home bank ATMs more than three times, per month from December is not an easy one. The reality is, while ATMs form an integral part of the financial ecosystem for customers, they are a huge operating cost for banks.
The automated teller machine (ATM), which debuted in America in 1969, was developed for two important reasons: To reduce serpentine queues at bank branches and to ensure that a customer had access to his/her cash around the clock. Over the years, the increase in ATM usage also brought about a shift in consumer behaviour and some customers began to perceive the ATM as their personal wallet.
Every time a customer is serviced at an ATM, the bank loses approximately R15 for a financial transaction (cash withdrawal, payments) and approximately R5 for a non-financial transaction (account balance enquiry, Pin change etc). Typically, this cost is towards ATM deployment, maintenance and interchange fees incurred by banks. To avoid these spiralling costs, some banks have decided to pass on part of these charges to the customer.
While the ATM still remains the most important channel through which customers withdraw cash in metropolitan cities, following some discipline will help you avoid paying any excess charges.
Take stock of your weekly cash needs. Withdraw an amount that is slightly higher than your weekly threshold. As far as possible, withdraw this amount all at once rather than visiting the ATM multiple times.
On up to eight occasions (five on-us and three off-us transaction) a month, you can use the ATM without being levied any fees. Avoid non-financial transactions such as balance enquiry, FD booking and change of Pin during your free visit. For all non-financial transactions, use alternate channels like the IVR, SMS, mobile and netbanking.
Use a swipe machine
As far as possible, reduce your dependence on cash. Instead, swipe your debit card at shops/merchants that offer point-of-sale (POS) payments. This way, you will save cash only for a rainy day.
Register for netbanking or download your bank’s mobile banking app. Get into the habit of using these channels and enjoy a whole range of financial and non-financial transactions at your fingertips.
Remember, money saved is money earned. While technology enables hassle- free transactions, it is extremely crucial for consumers to remain updated on its usage and the related aspects for their own benefit.
By Ritesh Pai
The author is head, Direct Banking Channels at RBL Bank