Online revolution notwithstanding, ATMs are here to stay

After online transactions ate into the volume of ATM transactions post demonetisation, the trend seems to be reversing itself in the last quarter

Illustration/Ravi Jadhav
Illustration/Ravi Jadhav

The dissent of the people towards ATMs seems to have lessened in the past two months, as per NCR Corporation Pvt. Ltd., India's leading market shareholder (44%) in terms of ATM manufacturers.

The cash crunch had resulted in a surge in the number of digital transactions pan-India, even as ATMs had struggled with queues and cashless inventories. But this trend seems to have reversed itself in the last quarter.

The U-turn
"During Diwali 2016 in October - before demonetisation - the average number of transactions per day per ATM was 130," said Anand Garollu, general manager (services), NCR Corporation. "But in November-December, the number dropped to 90-95, the lowest we have ever seen. However, in the past two months, the graph seems to be not only stabilising but also reversing. We are now in the 125 transactions ballpark range, per ATM per day."

According to him, the cash crunch seems to have eased and banks seem to finally have some clarity on what their strategy should be to combat it. "If you look at Q1, there was a huge shortage of cash in the markets. A number of people moved to digital transactions in this period because they didn't have an alternative. But now, if you look at digital transactions for March-April-May, they seem to be declining (as per data received from the government). There were 119 crore digital transactions in March, which dropped to 188 crore in April, and further to 111 crore in May," he said.

For the same time period, ATM transactions have bounced back - the average transactions per day per ATM were 115 in March, 120 in April, and 125 in May.

'People prefer cash'
Garollu said though there was a considerable number was moving to online transactions, it wouldn't affect the number of ATM transactions. "People are more comfortable using cash," he said. "If you look at the cardholder base now, it is only going to go up in the future. There might be a portion of consumer base that refrains from using ATMs, but new consumers will counter this."

Rakesh Aulaya, senior manager, PR (India and South Asia), said, "One big thing that is going to happen is that a lot of old machines will get replaced... It can be a less cash economy, but not a cashless one."

111 cr
Number of digital transactions in May 2017

125
Daily number of ATM transactions in May 2017

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