The Business Correspondent Federation of India (BCFI), representing bank agents serving underbanked regions, has called for a 50 basis point increase in fees for Aadhaar-enabled Payment System (AePS) transactions. The proposed adjustment aims to address escalating operational costs and the impact of transaction failures on both agents and customers.

Current Fee Structure and Proposed Changes

Presently, AePS transactions are priced at 0.5% of the transaction amount or ₹15, whichever is lower. The BCFI proposes elevating this to 1% or ₹21, whichever is lower, to better align with the costs incurred by business correspondents (BCs).

Operational Challenges Faced by Business Correspondents

BCs are confronting several challenges that hinder their ability to provide seamless financial services:

• Increased Equipment Costs: The expenses associated with acquiring and maintaining micro-ATMs and biometric devices have risen, straining the financial resources of BCs.
• Transaction Failures: Frequent transaction failures, often due to connectivity issues or authentication errors, lead to customer dissatisfaction and financial losses for BCs, who may not receive compensation for failed transactions.
• Regulatory Compliance: Adhering to evolving regulatory requirements necessitates additional investments in training and technology, further escalating operational costs.

Impact on Financial Inclusion

BCs play a pivotal role in advancing financial inclusion by delivering banking services to underserved and remote areas. The financial viability of BC operations is crucial for sustaining these services. Inadequate compensation may result in reduced service availability, adversely affecting efforts to promote financial inclusion.

Industry Perspectives

The BCFI’s appeal underscores the necessity for a balanced approach that considers the operational realities of BCs while ensuring affordable services for end-users. Stakeholders, including regulatory bodies and financial institutions, are urged to engage in dialogue to devise a sustainable solution.

Conclusion

The BCFI’s request for higher AePS transaction fees highlights the operational challenges faced by business correspondents. Addressing these concerns is essential to maintain the momentum of financial inclusion initiatives and ensure the delivery of banking services to India’s underserved populations.