Indian banks are changing the way they pay companies that manage their ATMs. Earlier, banks used to pay these companies based on the number of transactions (like withdrawals or deposits). This is called a transaction-based model. Now, many banks are moving to a fixed-price model, where they pay a fixed amount every month or year, no matter how many transactions happen. Many new contracts for ATMs and cash recycler machines are now being given under this fixed-fee system.
Why are banks making this change?
- It gives better control over costs – In the earlier system, ATM-related costs used to change every month depending on how much the machines were used. However, with the rapid growth of digital payments, ATM usage has become uneven and less predictable. Because of this fluctuation, managing expenses became more difficult for banks. Fixed-price contracts now help banks plan their budgets more effectively, as they provide stable and predictable costs, allowing better control over overall expenses.
- It improves performance and service quality – Earlier, vendors earned more money when the number of transactions increased, as their payments were linked directly to usage. Now, with fixed payments in place, their focus has shifted from transaction volume to service quality. Since the payment amount remains the same, vendors concentrate on keeping ATMs working properly with maximum uptime, carrying out regular maintenance, ensuring quick repairs whenever issues arise, and providing better overall service to maintain performance standards.
- It ensures that ATM companies provide steady and reliable service – Under fixed contracts, a single company is responsible for handling all ATM-related services, including cash replenishment, regular maintenance, system monitoring, and technology upgrades. Since one provider manages everything, there is clear responsibility and better coordination. This centralized approach strengthens accountability, as the company can be directly held answerable for performance, efficiency, and overall service quality.
Major Banks Planning New Installations:
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Union Bank of India – around 2,000 machines
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Bank of India – around 3,700 machines
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Canara Bank – nearly 1,500 machines
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Indian Bank – about 1,006 machines
Banks have asked for the installation of around 17,350 new ATMs. Out of these, about 13,100 will be cash recycler machines. A cash recycler is a special type of ATM that allows people to both deposit and withdraw money. The machine uses the cash deposited by customers to give money to others who want to withdraw. Because of this, banks do not need to refill the machines with cash as often, which helps save time and effort.
Overall, this change is meant to make costs predictable for banks and provide smoother, more reliable service for customers.
