Cost of operating ATMs too high: Rwanda banks

Automated teller machines have become a costly affair for commercial banks especially because of the low volume and value of transactions.

Statistics from the National Bank of Rwanda show that as of December last year, there were 354 ATMs. However, 65 per cent of them are concentrated in Kigali.

Over the past ten years, banks have invested an estimated Rwf13 billion into purchasing and installing ATMs.

A modern ATM machine, according to industrial players “costs over Rwf36 million.”

However, by the end of 2014, only Rwf345 million was transacted by all banks in the country, which means on average at least Rwf9 million was transacted daily.

When the daily transactions are shared equally by the 12 big commercial banks, this translates into each bank transacting Rwf750,000.

The money the banks make daily, according to analysts cannot pay rent for the strategic places where ATMs are located hire armed guards pay for electricity run generators meet transport costs for getting money into the ATMs and the Internet data.

“There is no bank in the country that has recouped its investment in ATMs,” said Konde Bugingo CEO of Development Bank of Rwanda (RDB).

ATM charges in Rwanda are low compared with other countries in the region.

Mr Bugingo’s concern is shared by Lawson Naibo, chief operating officer of Bank of Kigali and Maurice Toroitich the managing director of KCB Rwanda.

Analysts aise banks to strike a balance between remaining profitable and also attracting the required volumes and value of ATM transactions by lowering their charges.

But banks say they are currently operating at their lowest. Reducing the charges would make operating ATMs more unprofitable.

On average commercial banks charge their customers Rwf250 per transaction but when they handle other bank’s customers they charge about Rwf400 per transaction.

Customers using international ATMs are charged almost Rwf2,000 for each transaction. This means until the local inter-operability is enforced, banks will continue grappling with the low volumes of ATM transactions.

However, East African Community states under the financial integration project, seek to reduce the charges of international card schemes by almost 50 per cent.

Cross-border banking cost

The move is aimed at reducing the cost of cross-border banking transactions as regional policy makers conclude procedures for an interconnected financial switch for electronic banking services in the bloc.

The charges, according analysts could drop from $2.5 to $0.8 per transaction when the inter-operability of card switches goes live in Rwanda, Uganda, Kenya and Tanzania.

The card switches will then be linked to the real time gross settlement (RTGS) systems of their respective central banks.