The secrets of ATMs
The secrets of ATMs
Commercial banks all complain that they have been incurring with ATM services, but they still keep developing ATM services.
Experts said the prices of ATMs vary depending on the technologies, but an ATM is priced no less than $20,000. Banks not only have to pay for the machines, but also spend money to maintain the ATMs’ operation, including the fees for premises for ATMs, depreciation, equipment maintenance, management and labor cost, and software licenses.
By the end of 2012, Vietnam had had some 15,000 ATMs, which means that banks have to keep at least VND15 trillion at ATMs (the average sum of money kept in an ATM is VND1 billion). Banks have to pay interests for the sum of money, even if the money still lies idle in ATM. If noting that the average interest rate is 2 percent per annum, banks would have to pay VND300 billion a year.
Banks also have to spend money to put cash into ATMs. A banker in HCM City said his bank has to put VND1 billion in banknotes to every ATM once every three days. The sum of money is enough for 750-900 transactions made in HCM City.
The Vietnam Bank Card Association, after calculating the expenditure items, has reported that it costs VND9,000 for every transaction with ATMs on average. However, the fees are different for different banks. Vietcombank, for example, has announced the cost of VND6,000 per transaction.
Suppose that the cost is VND9,000 per transaction, and that every ATM serves 100 transactions per day, banks would have to spend VND4.9 trillion a year for their ATM systems, which means that every bank needs to spend VND100 billion a year.
This is the reason banks have cited to insist on the charging of fees on ATM transactions. After a lot of failures, banks have successfully got the nod from the State Bank of Vietnam to charge VND1,000 for every inner-network transaction, commencing from March 1, 2013.
However, analysts say, while banks have been complaining about the big expenses they have to pay to maintain their ATM networks, they have never talked about the benefits ATMs can bring to them.
ATMs not only benefit people, because they don’t have to come to bank branches to make transactions, but they also benefit banks as well, because they help reduce the costs for making transactions with clients. Banks don’t have to hire more workers and spend higher costs to receive clients on Tet days, for example, or rush days, when the demand for cash increases significantly.
Especially, ATMs help banks mobilize huge capital from the public at very low costs. Suppose that there is VND50,000 in every account, banks would have a huge capital of VND1.2 trillion, if noting that only 50 percent of cards are active.
In order to mobilize the sum of capital from the public as term deposits, banks would have to pay the interest rate of 8 percent per annum, which is the current ceiling deposit interest rate as stipulated by the State Bank.
However, in fact, banks only have to pay 2 percent per annum, because the money left in bank accounts is considered as demand deposit. As such, banks can save VND75 billion when they can mobilize capital at low costs.
If the minimum account balance is raised to VND500,000 instead of VND50,000, the benefits banks can enjoy would be 10 times higher. Therefore, VIB Bank has suggested not to charge fees for cash withdrawal transactions on the card holders with the minimum balance of VND500,000 in their accounts.
vietnamnet
