An ATM stands for automatic teller machine. An ATM is an electronic banking outlet that allows customers to complete basic transactions without the aid of a branch representative or teller. Anyone with a credit or debit card can access their card at most ATMs, either in Nepal or abroad. An atm card is a payment card or dedicated payment card issued by a financial institution which enables a customer to access their financial account via its and other ATMs and to make approved point of purchase retail transactions.
How do card transactions work?
Mr. Mohan has a Sanima bank Visa network debit card. He wants cash at the time, so he finds a Sanima bank’s atm near him. He goes there and inserts the card. As soon as he inserts the card, a computer inside the machine reads the card details and sends a request to the card company, in our case, Visa. Visa sends this request to the bank to verify the card. Now your visa requests your authentication PIN. As you insert your PIN, Visa authenticates your PIN and opens your withdrawal window. You put in some amount. Again, Visa requests from the bank that the account have that much balance in it. If you have, then it will get you the money, otherwise not. This process is almost similar to that for credit cards also.
(Fun fact: the sound of money counting from an ATM machine is only the sound of the built-in speaker, not the sound of actual cash counting.)
How much does it cost?
It may vary from provider to provider. Banks usually pay up to 1% on debit cards and 1% to 3% on credit cards. Some amount is also levied for new card issuance, so the bank charges us 300-500 per year. Most of the amount, in this case, is sent to the specific network company, which is also an economic cost for the country because banks have to pay the provider in dollars.
Is the ATM card of the future or of the past?
In the long run, we will not ask this question because new technology is replacing this card technology. The new technology is QR Code Payment and Virtual Cards. QR Code technology has been growing rapidly in Nepal, India, China, and other countries in recent years. This technology is provided through mobile applications (Apps). These apps are keen to replace physical ATM card formats with QR codes and virtual cards. Esewa (Nepal), Phonepe (India), and Wechat (China) are major examples of mobile and web applications used for QR Payments.
As you know, esewa is South Asia’s first payment app company, which revolutionized the payment environment in Nepal. But after demonetization in India and the development of UPI (unified payment interface) by NPCI (National Payment Corporation of India), digital payment evolved at a very fast rate, so Nepal also adopted this new wave and then ConnectIps by NCHL, Fonepay by F1soft, and Khalti by Janaki Tech, etc. emerged in the Nepali payment market, evolving and making payments easy. Nepal now has almost 50–60% of its transactions digitalized, including digital clearing of cheques and ATM cash withdrawals, and it is increasing.
(Fun fact: Nepal launched its first payment app in 2009, while India followed suit in 2010.)
Payment via QR Code, The Future:
"QR code" stands for "Quick response code." The QR Code can be the universal payment code that helps us to remove the card and its cost.
(This can also help to protect the environment from pollution.)
Things that should be done to make QR Payment a Universal Payment Code:
- Interoperability: Every application and network should be connected with each other which helps us to make payment in any QR present with merchant. In case of Nepal, there are many operators and provider but they are not connected so that we have to install different app for payment which demotivate user to use scan and pay and user pay with cash. International and national operator are interconnected then international payment can be done easily and for Nepal it is very beneficial for Freelancers and social media influencers who receive money in foreign currency but cannot receive their money in their bank account directly. This network can help them to receive that money in their mobile directly. Which also indirectly help country to gets forex. Tourist can pay easily through there app and Nepalese can pay in foreign land so that they should not get cash in hand. This idea can boost economy as Nepal has huge potential of Business process outsourcing and payment received by these person and company will be from white channel which help govt to get data and information of these transaction and earn some revenue from it.
- Acceptance In ATM machine: Atm card majorly used for cash withdrawal in Nepal. For simple cash withdrawal every ATM if accept QR scan Facility then there is no need to use Card for cash withdrawal. And if every network is connected and majorly vendor accept QR scan then there is no need to withdrawal cash.
- Credit Facility: BNPL (Buy Now Pay Later) is emerging market in world which is rapidly growing in different developed countries. It can be a replacement of credit card. These payment operators can tie up with banks and financial institutions to give user this facility so that bank decrease its Credit card issue. Nepal has only 2-3 lakh credit card user, this number can be increase drastically by use of this facility. But one should be careful while giving credit facility, should be given to eligible users.
- Acceptability in Government Offices: Every government office or every office where any financial transaction is involved should be digitize. This will improve the use of digital medium for payment and encourage for digital economy which make least cash involved and that helps to control corruption. Government should discourage use of cash also.
Digital economy is one of the options to develop country by reducing corruption, restrain excess printing of cash, fast economy, record of every transaction etc. in this world of technology everything is going digital so there is some risk involved such as cyber scam, online fraud etc. we have to be careful.
Conclusion: ATM card is going to be past in some years at least in this part of world.
Semi-Qualified CA, Blogger, Investor