PREVIOUSLY, it was reported that the RM1 fee for interbank ATM withdrawals would be revived from February 1, 2022, with Maybank, CIMB, Citibank and HSBC among the banks that have made an announcement on the issue.

The government introduced the waiver from April 6, 2020, three weeks after the start of the first movement control order (MCO) in March last year so that people could withdraw at the nearest ATM under the MEPS system without having to pay the RM1 charge.

Since their introduction in the early 80s, ATMs have served as a convenient access points nationwide. It served the needs of the public not just in the urban areas but also in the rural towns.

Since 2005, when all the ATM cards were to converted to chip based infrastructure and doubled up as debit cards – which allows cardholders to make purchases at the POS terminals of approximately 50,000 merchants nationwide accepting domestic debit cards – we have a high penetration of 50 million ATM cards.

Even though MEPS and the banking industry have been actively promoting the use of the ATM cards by increasing the number of POS terminals and to reduce the need for cash usage, statistics from the 2020 Worldpay Global Payments Report from FIS revealed that Malaysians still strongly favour cash.

Some 64% of POS purchases are made in cash (more than triple the next-most-used payment method, credit cards, with a share of 21%).

From a total of approximately 9,800 ATMs in the country in 2005, the number has increased gradually reaching a total of 18,000 in 2013.

However, this number decreased in 2020 to 17,780 or 5.5 ATM access points per 10,000 adults in the country, possibly to consolidation and costs efficiency exercises where non profitable bank branches were closed.

In a speech delivered in October 2013 at the Launch of the MEPS ATM initiative, the then deputy governor of Bank Negara Malaysia said 93% of the total financial transactions conducted at the ATMs over the previous three years were cash withdrawals, averaging 500 million withdrawals with an average value of approximately RM276 billion per annum.

The 7% balance of the ATM transactions were for non-cash withdrawal funds transfer, bill payment, card and loan repayment, purchase of share application and reload of mobile prepaid applications.

The average total number and value of transactions from ATMs for the past seven years have increased gradually, so it appears that ATMs remains and will continue to remain an integral part for individuals in the country.

In September 2021, Prime Minister Ismail Saabri Yaakob disclosed that more than 500,000 middle-income group (M40) households had slipped into the B40 category, while the absolute poverty figure in Malaysia rose from 5.6% in 2019 to 8.4% in 2020, all brought on by the pandemic.

If it includes the number of sizeable families affected by the recent flood across several parts of the country, the above numbers will see a jump from the already declared statistics.

Unlike the T20 and certain sections of the M40, the B40 and those who recently was relegated to B40 are largely dependent on cash and short-term debts to make ends meet.

As stated in its annual report, promoting inclusive finance – where all segments of society have access to suitable and affordable formal financial services – has always and remains a key focus and specific mandate of BNM in contributing towards equitable and sustainable growth.

Continued convenient and zero-cost access to their monies via ATM to these groups are a low-cost tool to boost financial inclusion, as societal benefits outweigh collective costs.

The collective costs are just dwarfed by the benefits. It can also quicken the prospects of recovery from the pandemic for these groups.

At least 92% of the total adult population in Malaysia has a bank account. Of these, 74% (13.7 million) people do internet banking. Yet, only 43% (5.9 million) of the internet banking subscribers make financial transactions.

The country still has a long way to go to encourage users to adopt electronic means in conducting their banking transactions.

Statistics from BNM reveal that, during the MCO in 2020 there was a strong surge in demand for cash, posing operational challenges to the banks in ensuring that there is sufficient cash to meet surging demand.

In fact, since the start of the pandemic, BNM, in collaboration with the banks, has had to set up mobile ATM machines and counters in rural areas to hand out government aid.

Meanwhile, many Malaysians do not even have basic access to financial activities and services where approximately one-third of people in Sabah and Sarawak, including half of low-income earners, do not have a bank account, 55% of which are female, and 46% are youths ages 15-24.

BNM has acknowledged in its own paper Malaysia Experience in Financial Inclusion: Unlocking Shared Benefits for All through Inclusive Finance, that despite improvements in increased accessibility to financial access points across the country, there are still gaps in the utilisation of financial products and services, particularly among low-income households where affordability remains a challenge.

Financial institutions entered the pandemic from a position of strength, largely due to their cash buffers built up over the years. This strong financial position should enable them to absorb the RM1 fee, which they are charging the consumers while still able to maintain and sustain operational and financial resilience.

BNM should play a role in ensuring equitable opportunities for the B40 group so it will not be left behind as the nation recovers from these twin disasters caused by the pandemic and flood.

Across developed countries, statistics show that ATMs are still going strong, used on average 300 times a month, while 40% of ATM users use an ATM eight to 10 times a month.

Though ATMs have in some ways been affected by mobile payments, they are still viewed as an asset to many people. They are still being used and provide a positive experience for customers.

In Malaysia, even though there are no official statistics, it is not surprising to note that more than 90% of those who frequents ATMs are those in the B40 group and certain section of the M40 groups, while the remaining in the M40 and the T20 has the option of using online banking and credit cards for their daily needs and necessities.

The introduction of MEPS to assume ownership of the payment infrastructure was for the banks to reduce costs and adopt common standards, and not for the consumers to see an increase in costs for using the payment infrastructure.

ATMs cater to those that have not adopted online banking. Increasing the costs of usage do not necessarily mean critical mass would be achieved, where the public is familiar with or comfortable in using internet banking.

As started in its financial inclusion framework, accessibility of BNM to the public is equally important.

Through interaction with the public, BNM improves its understanding of financial matters and gains valuable insights on real issues facing the consumers, which serves as inputs for policy decisions.

Thus, the intent, cost and benefits of reintroducing and maintaining the fees of RM1 should be reviewed and waived altogether. – January 6, 2022.

* FLK reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.