White label ATMs take banking to masses

Understanding the need to take banking to rural and under-penetrated tier 3-6 areas of the country,the Reserve Bank of India (RBI) released guidelines in June 2012 for the introduction of white label ATMs (WLA). These are essentially ATMs that are owned and operated by non-banking companies and do not display any bank’s branding.

WLAs serve customers from all banks and will be interconnected with the entire ATM network in the country. The guidelines specified focuses on increasing rural accessibility of ATMs. Customers from any bank can withdraw cash from such white-label ATMs,with similar functioning as a bank ATM. In terms of previous rules,only banks were permitted by Reserve Bank of India (RBI) to set up ATMs as extended cash delivery channels.

Since banks treat ATMs as a cornerstone of their alternate channel strategy,WLAs are intended to serve as an important medium of banking for consumers. WLAs have proved to be a useful addition to the existing banking network and is addressing the underpenetrated semi urban and rural market which till date had minimal or negligible access to ATMs,while providing more options for the masses in urban locations. With the expansion of the White Label ATM (WLA) network,customers can have access to basic banking facilities located closer to their home or place of work.

With ATMs being available 24X7,the masses will have better access and will further drive the agenda of financial inclusion. It will be a very effective channel in inculcating the habit of banking among the rural populace and thus give a much needed shot in the arm to financial inclusion in India.

Given their non-banking entity,the WLA Operator (WLAO) is required to declare one “Sponsor Bank”,who will serve as the Settlement Bank for the settlement of all the service transactions at the WLAs. Also,the rationale behind this move was to ensure that the cash is sourced from the sponsor bank,thus ensuring quality and genuineness of the notes dispensed. The authority has also taken cognizance of the difficulties expressed by stakeholders in operationalising WLAs if banks were to manage the cash and thereby permitted WLAOs to manage cash at their ATMs.

This move is expected to speed up the WLA roll-out in India,allowing white label ATM license holders to set up ATMs at a faster rate as it reduces dependencies and enables a better control on the service levels. It will definitely boost the confidence of WLAOs allowing them to enable financial inclusion and accessibility with unmatchable swiftness.

While 17 companies initially applied for WLA licences Tata Communications Payment Solutions Limited (TCPSL) is the first and only organisation to have received the approval and set up white label ATMs in the country. The mandate allows TCPSL to deploy 15,000 WLAs in the country over the next three years,with 5,000 WLAs in the first year,in the ratio of 2:1,with every ATM set-up in tier 3-6 cities,1 ATM can be set up in urban city.

The company launched its first WLA network under the brand name Indicash ATMs in the month of June in Maharashtra. India’s first network of white label ATMs is aimed at empowering millions of Indians with the convenience to access their own money with ease. The launch marks a milestone for the country and ushers in a new era of ATM accessibility for the masses across cities,towns and villages. Since,the launch the company has expanded the network to multiple states; presently about 500 WLAs have already been deployed across Maharashtra,Kerala,Karnataka,Andhra Pradesh,Tamil Nadu,Delhi NCR,Uttar Pradesh and West Bengal.

On the basis of the initial response,it can be safely said that the Indian market has warmed up to the concept of White Label ATMs. This is well reinforced by the fact that the transaction uptake is similar to bank ATMs across tiers. In fact,the Tier 3 and below markets are adopting to WLA ATMs without any inertia,clearly indicating that WLAs are addressing the latent potential in these markets. Access to ‘neighbourhood convenience’ and ‘simple and user friendly’ experience are contributing to the concept adoption. The adoption can be further fuelled by educative cum experiential programs to dispel fears and apprehensions regarding ATM usage and to nurture these markets.

Having said that,the WLA initiative will lubricate the entire banking ecosystem as people will start opening more bank accounts to enjoy the ATM convenience and in turn banks will be forced to issue more cards. Further,this channel will also provide the last mile connectivity for the masses in these locations when the direct money/benefit transfer (DBT) comes into play.

Unlike bank ATMs,the white label ATMs also present themselves with substantial opportunities of ‘Third Party Advertisement’ and ‘Value Added Service’. Due to the presence of WLAs in prominent deeper locations,they can be a key advertising channel for most consumer brands and in turn will open a plethora of options for semi urban and rural markets in terms of accessing brands and services that till date are restricted to urban markets.

With the ATM population in the country expected to reach 400,000 by 2017,the WLA story can be the next poster boy for India’s financial growth. Undoubtedly,the

White label ATM initiative is truly set to usher India into a new era of ATM accessibility.

White label ATMs are similar to Bank ATMs

Like most other bank ATMs White Label ATMs offers a host of cash and non-cash services such as cash withdrawals,balance enquiries,mini-statements and PIN change.

Customers from any bank in India can withdraw cash from such white label ATMs.

Likewise all savings account holders of banks in India can enjoy up to first five free transactions in a month on White Label ATMs/other bank ATMs.

Similar to most bank ATMs,white label ATM users can also withdraw a maximum of 10,000 per transaction. For withdrawing more cash more transactions can be undertaken subject to the limit set by the respective banks.

Beyond banks

*The RBI released guidelines in June 2012 for the

introduction of white label ATMs

* These are essentially ATMs that are owned and operated by non-banking companies and do not display any bank’s branding

* The white label ATM operator is required to declare one ‘Sponsor Bank’ for the settlement of all transactions at the ATM

The author is CEO,Tata Communications Payment Solutions Ltd