White Label ATMs – Assisting Payments & Financial Inclusion

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Over the last decade, the share of payments across electronic channels has significantly increased. Electronic payments have helped banks in providing better products and services to its customers and have helped in reaching out to a wider audience base across the country. Growth of electronic payment channels such as ATMs, POS, internet and mobile have played an important role in reaching out and providing access to customers thereby enabling payments. RBI’s payments systems vision indicates its renewed commitment towards providing a safe, efficient, accessible, inclusive, and authorised payment and settlement systems for the country. It has used both incentive and regulation to make banks and users adopt electronic methods for payments.

Automated Teller Machines (ATM) – How it has evolved over time
ATMs were introduced by the banking industry in the early 1990s as most banks lacked a strong branch network and ATM technology helped reach out to a wider customer base by offering hassle free services at a comparatively lower setup cost.  The industry has seen various phases including licenses given selectively to players and the setup and dismantling of the Swadhan ATM network (ATM network by group of banks). Since then, innovations in ATM technology have come a long way and customer receptiveness has also increased manifold.
Earlier only banks were permitted by Reserve Bank of India (RBI) to set up Automated Teller Machines (ATMs) as extended delivery channels. Later on, banks could tie up with private service providers and outsource deployment and maintenance of their ATMs. Cash management and connectivity to banking networks were provided by the sponsor bank whose brand is used on the ATM. These were labelled as brown label ATMs. Private service providers over a short span of time have built expertise in managing the ATM business and have contributed to the growth of the industry. Private presence is available in the entire chain of payments and now some of these players also control channels.

WLA – Reaching out to semi urban and rural India
A large proportion of India’s population is still unbanked or under-banked. There are about 400 Mn card holders in the country. According to data, as on March 2014, India had a total of 1,60,005 ATMs of which 58% (93521) are in Metro and Urban centres, 27% (43200) in semi-urban centres and only 14.5% in rural centres.  In spite of rapid ATM growth over the last decade, regions beyond India’s urban and metro cities remain largely untapped as banks have traditionally targeted urban areas for setting up new branches and ATMs.  With a need for reaching out to smaller locations where penetration was low, RBI introduced the concept of White Label ATMs in 2013. The new mandate enabled private non-banking entities, with a minimum net worth of Rs 100 crore, to set up ATMs.
As per guidelines laid down by the RBI, White Label ATM Operators, have a focus on semi urban towns and rural areas. Combined with the expertise in reaching out to audiences in such locations and in some cases managing ATM networks, WLA’s are better equipped in reaching out to a wider audience base and making payments accessible to card holders in such areas – that are predominantly under banked or unbanked areas.

WLA – Providing banking services
The services at a White Label ATM include basic banking services like Cash Withdrawal, Balance Enquiry, Mini Statement and Pin Change thereby serving as an extended arm of banks.  With WLA’s, for a fixed fee per transaction, banks can reach out to a wider audience base and also eliminate the capital costs of putting up an ATM network.
In comparison to commercial bank ATMs, WLA’s are better positioned to act as a one stop shop for customer needs and requirements, given RBI’s nod of using WLA locations for value added services. This could include financial as well as non- financial services. As RBI gets more and more confident with White Label ATM Operators, it will allow additional features at a WLA like use of Foreign cards, use of ATMs to deposit cash etc. In the future, WLA ATMs, like in many international markets can look at providing extended banking services including account opening, cash deposit services, fixed deposit opening, etc.
Today, with the intent to extend the reach of banking services to a larger population base, White label ATMs are gaining ground and by reaching out to customers in such locations, White label ATMs will help in inculcating a banking habit among such customers and will also further the cause of financial inclusion.

Views expressed here are personal

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