White Label ATMs (WLAs) have been a significant development in the Indian banking sector, revolutionizing the way individuals access banking services.
These ATMs, operated and managed by private non-bank entities, have played a pivotal role in expanding the reach of banking services to remote and underserved areas, promoting financial inclusion, and easing the burden on traditional bank ATMs.
Understanding White Label ATMs (WLAs)
White Label ATMs are ATMs that are owned and operated by non-banking entities under a license obtained from the Reserve Bank of India (RBI).
Unlike bank ATMs, which are operated by banks themselves, WLAs are managed by independent companies, often in collaboration with multiple banks.
These ATMs are denoted as “White Label” because they do not carry the logo of any specific bank on their machines.
Below mentioned are some examples of companies that operate white label ATMs-
- Indicash – India’s largest White Label ATM network responsible for ‘uberisation of ATMs.
- India1 Payments (BTI Payments Pvt. Ltd.)
- Hitachi Payment Services Pvt. Ltd.
- Tata Communications Payment Solutions Ltd.
- Vakrangee Limited.
Evolution and Growth of WLAs in India
The concept of White Label ATMs was introduced by the RBI in 2012 to expand the ATM network in the country.
Before WLAs, the number of traditional bank ATMs was limited, particularly in rural and semi-urban areas.
WLAs addressed this gap by enabling private companies to set up and operate ATMs in areas where banks found it economically unviable to establish their branches.
Since their inception, the number of WLAs has steadily increased, providing a significant boost to India’s ATM infrastructure.
The strategic positioning of these ATMs has not only improved banking services accessibility but also helped in reducing the burden on bank-operated ATMs in urban centers.
Services Provided by WLAs
WLAs provide banking services to the customers of banks in India, based on the cards (debit/credit/prepaid) issued by banks. In addition to dispensing cash, WLAs may offer many other services / facilities which inter-alia include:
- Account Information
- Cash Deposit
- Regular Bill Payment
- Mini / Short Statement Generation
- PIN Change
- Request for Cheque Book
Key Features and Advantages of WLAs
Enhanced Reach: WLAs have significantly expanded the geographical reach of banking services, particularly in rural and remote areas where traditional banks had limited presence.
Promoting Financial Inclusion: With WLAs, people in underserved regions can now perform basic banking transactions, such as cash withdrawals, balance inquiries, and fund transfers, without having to travel long distances.
Reduced Pressure on Bank ATMs: White Label ATMs have eased the congestion and long queues often witnessed at bank ATMs, especially in urban centers, thus providing a more convenient banking experience.
Multiple Bank Interface: WLAs usually offer services of multiple banks, allowing customers of various banks to use the same ATM for their transactions.
Innovative Services: Some WLAs also offer additional services such as bill payments, mobile recharges, and Aadhaar-enabled transactions, further enhancing their utility.
Challenges Faced by WLAs
While White Label ATMs have contributed significantly to financial inclusion, they also face certain challenges:
Cost and Revenue Model: Setting up and operating ATMs involve substantial capital investment. Revenue generation can be a concern for some WLAs, especially in remote areas with low transaction volumes.
Cash Management: Ensuring a consistent supply of cash at remote locations can be logistically challenging for WLAs.
Regulatory Compliance: As non-banking entities, WLAs must comply with various regulatory requirements, adding complexity to their operations.
RBI has informed that 98 complaints have been received against WLAs from April 01, 2022 to June 30, 2023. Such complaints fall under the purview of Consumer Education and Protection Cells (CEPCs) of RBI.
CEPCs examine each complaint based on the merits of the case, documentary evidence available and the comments received from the Regulated Entity (RE) and its adherence to the extant regulatory guidelines.
Government and Regulatory Support
The Indian government and the RBI have been proactive in supporting the growth of White Label ATMs.
Initiatives such as “Pradhan Mantri Jan Dhan Yojana” and “Financial Inclusion Plan” have encouraged private players to set up ATMs in remote areas. Additionally, the RBI has periodically revised guidelines to facilitate the operation and expansion of WLAs.
RBI, vide its circular dated December 30, 2016, has allowed White Label ATM Operators (WLAOs) to source cash from retail outlets to address the cash sourcing constraints.
To further give impetus to WLA deployment and to encourage more non-bank players to enter ATMs industry, RBI, vide its circular dated March 7, 2019, have permitted WLAOs to-
- (i) buy wholesale cash, above a threshold directly from the Reserve Bank (Issue Offices) and Currency Chests,
- (ii) source cash from any scheduled bank, including Cooperative Banks and Regional Rural Banks,
- (iii) offer bill payment and Interoperable Cash Deposit services,
- (iv) display advertisements pertaining to non- financial products / services, and in addition,
- (v) banks are permitted to issue co-branded ATM cards in partnership with the authorised WLAOs and extend the benefit of ‘on-us’ transactions to WLAs as well.
RBI, vide press release dated October 15, 2019 has enabled on-tap authorisation for WLAs.
Conclusion
White Label ATMs have emerged as a game-changer in the Indian banking landscape, significantly enhancing access to banking services for millions of individuals, especially in underserved regions.
By promoting financial inclusion and reducing the burden on bank-operated ATMs, WLAs have played a vital role in advancing India’s financial sector.
As technology and regulations continue to evolve, White Label ATMs are expected to remain a crucial component in the country’s journey toward greater financial inclusion and digitalization.