Cards Accepted, but with higher charges

Recently, Banknet had conducted a customer survey on Payment Products (i.e. Internet / Mobile Payments, Credit/Debit Cards, ECS and the likes).

Banknet survey showed that most people who have an ATM-cum-Debit card still use cash for making payments. Survey tried finding the reasons.

Survey found that when paying for Railway Bookings or at petrol pumps, banks charge 2.5% of the transaction value to the customer. In case of smaller merchant establishments, the merchants do not seem to afford paying transaction fees of 2% to card issuers/banks. So they pass on this cost to the customer so that their small margins are not affected.

The end customer thus prefers withdrawing cash from ATMs rather than paying 2 to 2.5% extra by swiping their cards, especially for higher value payments.

Hope these findings give banks/RBI some insights..

Other-bank ATM transaction fees got lower

The Institute for Development and research in Banking Technology (IDRBT) recently announced that it has removed the inter-bank ATM switching fees. What this means is that when you transact at an ATM that is not owned by your bank ("other-bank" ATM), your bank saves the two Rupees per transaction it would otherwise had to pay to IDRBT to connect to the other bank's infrastructure. So the direct benefit is to the bank. We can now expect this benefit to pass on to the customer, by way of reducing the inter-bank ATM transaction charges. Also, banks with a smaller ATM network can also join the Switch enjoying lower transaction fees for its customers.

Who's guarding your ATM?

ATMs are now the most used touch-point between the bank and the customer. The security measures at an ATM are far lesser than that found at a bank branch. ATMs are equipped with either a camera or a watchman, and rarely both, let alone any additional measures. This brings us to the question, that as an individual, is transacting at ATMs really secure?

Complex frauds like card swapping and card jamming are unheard of in India. The first few things that come to the mind on ATM frauds are card theft, PIN theft and mugging.

Unlike in case of credit cards, ATMs need a two factor authentication (1: the card, and 2: the PIN or any biometric identification) to operate. A two factor authentication is necessary for added security. PIN thefts are formed mostly out of customers casually disclosing the said code to, say, drivers or relatives to withdraw money for them. The bank pretty much cannot control these factors - these are left for the consumer to handle. Banknet's Report on the Indian ATM Industry has mentioned a few tips on how to prevent such frauds and other precautionary measures to be taken while at an ATM.

Still, robbing or mugging leaves some fraud issues unanswered. Hiring guards has been generating controversy. It is observed that customers usually ask these guards for assistance in case they face any problems. This tempts banks to train these guards to help such customers in need. However RBI feels that these 'self-service' terminals should not involve assistance from any such 'third parties' who may themselves stand as potential threats to customer safety.

Tell us what you think. Do we need guards at ATMs? If not, what should be the solution?