New ATM installations slow down amid push for digital payments

Banks have slowed down the installation of new ATMs in the past few months to join the government's push for digital payments, reported Business Line.

In the period between April-August 2017, only 93 ATMs were added by banks collectively compared to 4,936 additions in the same period during 2016, as per RBI data.

According to a senior public sector bank official, the slowdown in ATM addition is a consequence of banks’ digital push. “The emphasis is on a less-cash economy,” he added.

However, the setting of point-of-sale (PoS) terminals, a payment processing device that enables transactions at merchant outlets, has ramped up nearly 400 times compared to the additions in the same period last year.

In April-August 2017 period, over 3,53,281 PoS terminals were set up compared to 1,11,101 in the corresponding year. The total number of ATMs and PoS terminals for the period was 2,22,568 and 28,82,422, respectively.

Following demonetisation after which about 87 percent of the total notes in circulation were demonetised causing a cash crunch, the banks seem to have shifted to build a digital network such as a PoS network in a big way, said the report.

“In fact, during the demonetisation period, the government had announced a package of incentives and measures for the promotion of digital and cashless economy. So, all the banks were given a target. Hence, there was a substantial increase in the PoS infrastructure. That is the reason why it (PoS expansion) is still increasing," the official told the paper.

The latest RBI data shows the value of currency in circulation was 8.9 percent less year-on-year at Rs 16,00,190 crore as on October 6, 2017. It also indicates there has been a substantial increase in digital transactions.

In August 2017, the volume of credit card transactions at PoS rose to Rs 11.533 crore, amounting to a value of Rs 36,299 crore, against Rs 8.395 crore transactions valuing at Rs 25,746 crore in August 2016.

The volume of debit card transactions at PoS jumped to Rs 26.545 crore, with a value of Rs 35,413 crore against Rs 13.054 crore transactions amounting to a value of Rs 18,369 crore in August 2016.

“Given that digital transactions are being promoted, over a period, demand (for PoS) will only go up. Merchants have also realised that this is one of the better ways of doing transactions,” the official added.

Other digital banking channels like mobile banking and wallets are also gaining grounds. The central bank’s data show the number of mobile banking transactions was higher at Rs 9.964 crore with a value amounting to Rs 79,913 crore in August 2017 against Rs 7.005 crore amounting to a value of Rs 72,182 crore in August 2016.

The volume of transactions on mobile wallets soared to Rs 22.543 crore amounting to Rs 7,262 crore in August 2017 compared to Rs 7.068 crore transactions in 2016 at a value of Rs 3,074 crore.