Indian Kanoon - Search engine for Indian Law

10.47 The Informant contended that EFT Switch and the various delivery channels, which use an EFT Switch, are different. ATM Networks such as CashTree, Cashnet are similar to ATM Network/ Interchange switches, which provide ATM sharing services by interconnecting EFT Switches of different banks. It is submitted that all cross border money transfers need not necessarily be through an EFT Switch. Such transactions can also be facilitated through mobiles connected to an EFT Switch. The Informant has stated that a Pre-paid Instrument (PPI) is essentially a card with a specific economic value attached to it, which may be electronically encashed by its holder through an ATM/ POS/ payment gateway. It has to be used on any of the frontend devices of the banks such as ATM/ POS/ payment gateway and merely constitutes one of the delivery channels, which operates using EFT Switch. On white label ATMs, it is submitted that these are ATM devices operated by non-banking institutions. Since these ATMs are operated through third party vendors, they would need to establish technical connectivity with the existing bank network and the transaction would be facilitated through the EFT Switch of the bank whose debit card is being used. Hence, such transactions are captured in the RBI's data on ATM transaction of the relevant bank whose card is used on the white label ATM as considered by the DG while calculating market share. Moreover, as of February 2014, the number of white label ATMs in India is around 2200 as compared to 1, 50,008 ATMs and would have little impact on the dominance of ACI.

The Commission notes that the projected number of transactions that will be routed through the switch software, are utilized to determine the capacity of the switch software to be provided to the customer. It is also observed that the license fee is not determined exclusively by projected transactions to be routed through EFT Switch/ software. Further, the license fee is negotiated between ACI and ACI Banks even under the TBP model.

The Commission further observes that a significant volume of transactions constitute Off-Us card-based transactions through ATMs and POS terminals for the years 2011-12, 2012-13 and 2013-14. However, the RBI data used by the DG does not classify the card-based transactions into On- Us, Remote On-Us and Off-Us. Further, the said data also does not capture the process of routing of each transaction by the number of switches that needs to be activated to complete the transaction, all of which are EFT Switches. The Commission observes that the said data has been compiled to arrive at the volume of transactions taking place in the payment and settlement system and is not indicative of the number of times an EFT Switch is actually activated during the course of one transaction, both for authentication and for routing. This data would be an inadequate and incomplete measure of the market share and reliance on such data would lead to an erroneous assessment of ACI's dominance.

10.52 It is also pertinent to point out that parties have submitted that BASE24 software has been declared to be in the 'sunset phase' and that no further research and development is being conducted vis-à-vis the BASE24 software.

10.53 As already observed, the DG while assessing the market share of ACI has limited itself to the volume of transactions processed through an EFT Switch using frontend devices such as ATMs, POS terminals, internet payment gateways. In doing so, the DG has not taken into account the various users of EFT Switch/ switch software thereby limiting itself to a segment of the relevant market. Further, the DG has failed to recognize that in an Off-Us/ Remote-On-Us transaction, multiple switches get activated for one transaction i.e. of the acquiring bank, the ATM Network/ Interchange and the issuing bank. Therefore, a market share analysis based on the volume of transactions, as captured in the RBI data, would not give a true picture of the number of times a switch gets activated.