For a long term view of less cash costs

For a long term view of less cash costs

To achieve the trinity of Jan Dhan, Aadhaar and a more or less cashless economy that the government promises, it is essential for the commercial banking system to fall in line. This means abolishing or reducing many of the extra charges that banks impose on customers and merchants for transactions.
These charges are mostly arbitrary, opaque to even educated customers, and wholly incomprehensible to most consumers, small merchants and traders who are supposed to migrate to the new system.
A detailed report in this newspaper on Wednesday highlightedhow banks gyp customers. It said, with evidence, that banks charge customers a monetary fine if money in their accounts goes below a certain level.
Less than a dozen ATM transactions are free: more than eight, on average, are charged; up to four deposit or withdrawal transactions in banks are free, the fifth one and thereafter attract charges. So-called interchange charges — bank-to-bank ATM transactions — are high. If cashless is the goal, then what sense does it make to charge customers to issue a debit card? Facilitate cashless transactions, instead.
Yet, there is a cost to implementing all the infrastructure and connectivity, which has to be recovered. It cannot be done through taxes or high transaction fees. Either would hurt the government’s monetary trinity goals. The solution is to balance volume with immediate value. Most banks respond to quarterly profit data — social and policy goals seldom figure.
Instead, if their managements look further ahead, it is apparent that short-term losses might lead to big mid-term gains. That outlook, of setting up a structure for inclusion, at zero or low cost today, can build a future consumer community of hundreds of millions and must form the banking mindset of today.