Member banks of India’s largest ATM network will be required to pay 0.80 rupees (about two U.S. cents or 1 euro cent) for each ATM transaction, the National Payments Corporation of India said this month following a series of negotiations with banks.

The move comes after the National Payments Corporation in January took control of the National Financial Switch from Institute for Development and Research in Banking Technology, and ordered banks to pay 1 rupee for every ATM transaction they route through the network (see story). 

The National Financial Switch handles an average of 2.5 million transactions per day. It claims 37 member banks, which have about 50,000 ATMs among them.

The initial transaction-fee order met fierce resistance from member banks. Indian banks had paid no ATM transaction fees to the switch since 2007, when the previous operator waived the charge of 2 rupees in order to reduce ATM interchange costs.

Intense negotiations with member banks led to the decision to compromise slightly on the fee.

An official at Mumbai-based Axis Bank tells PaymentsSource that 0.80 rupees is still too high when compared with Visa and MasterCard’s fees, which range between 0.10 to 0.15 rupees per transaction.

“This fee is an additional burden on banks that already have to pay 18 rupees whenever a customer uses another bank’s ATM,” he adds.

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