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Home > Business > Business Headline > Report

ATM outsourcing gains currency

K Ram Kumar in Mumbai | September 12, 2003 09:11 IST

Banks are looking out for alternatives to owning and operating their own ATMs as the cost of offering the convenience to customers is proving to be prohibitive.

The India Switch Company, an independent payment systems provider, is seeking to tap into this outsourcing opportunity by establishing 1,500 ATMs over the next three years for the recently formed 'CashTree' ATM networking sharing alliance of five public sector banks -- Bank of India, Union Bank of India, Indian Bank, United Bank of India and Syndicate Bank.

In its capacity as service provider for enabling transaction switching among banks, ISC had signed a service level agreement in July with the five banks for establishing interconnectivity with their ATM switches.

According to Mani Mamallan, chief operating officer, ISC, a capital expenditure of about Rs 100 crore (Rs 1 billion) is envisaged for setting up the 1500 ATMs for 'CashTree'.

Besides the company will also be establishing 50,000 point of sale terminals at merchant establishments.

"Besides owning the ATMs and selecting the site, ISC will be responsible for ATM maintenance, ensure 24X7 service, cash management, back office infrastructure and personnel required to keep the ATMs running.

"We will also market the ATM service. The ATM sites as well as the machines will bear the 'CashTree' logo," he said.

A new ATM-cum-debit card, carrying logos of member banks, will be given to the customers of the five banks.

To popularise the network, the ATM-cum-debit cards will, among others, offer customers life insurance of Rs 50,000.

A National Advisory Board has been set up to co-ordinate the policies of the 'CashTree' network. Initially, the network will be open only to public sector banks.

A few other banks like Bank of Maharashtra, Dena Bank and Bank of Baroda are also expected to come on board.

The five banks will have the choice of either going in for the lease rental model, whereby ISC will charge each one of them a flat rate of about Rs 800 per day, or the transaction based model, whereby each transaction will cost the banks Rs 20-Rs 30 per transaction.

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