WHITE LABEL ATMs

WHITE LABEL ATMs

Non-bank entities that set up, own and operate ATMs are
called "White Label ATM Operators" (WLAO) while the ATMs are
known as "White Label ATMs" (WLAs). The WLAO's role is confined
to the acquisition of transactions of all banks'
customers by establishing technical connectivity with the
existing authorized, shared ATM Network Operators / Card
Payment Network Operators. The role of WLAs is that it
provides banking services to the customers of banks in India, based
on the cards issued by banks.

STAKEHOLDERS IN WLAs
Reserve Bank of India (RBI):
Gives license/permission to open WLAs.

White Label ATM company (non-bank entity):

Rents the place, looks after maintenance and servicing of the
machine.

Sponsor Bank:
Loads cash in WLAs. This also ensures counterfeit/fake currency
notes are not circulated through WLAs.

Payment network operator:

Visa, MasterCard, the National Financial Switch (NFS under Na-
tional Payment Corporation of India.) They provide technical
connectivity in the system.
 REQUIREMENTS OF RBI FOR WLAs

CENTER CITY CENSUS DEFINITION: POPULATION IS ... WHITE LABEL ATM

Metropolitan 10 lakh and above

Tier 1
If a company wants to
Urban 1 lakh and above
Setup ONE ATM here,

Tier 2 50,000 to 99,999

Semi-Urban Tier 3 20,000 to 49,999

Tier 4 10,000 to 19,999 Then, the company

must install TWO
Tier 5 5,000 to 9,999 ATMs here.

Rural
Tier 6 Less than 5,000.

OPERATOR-WISE NUMBER OF WLAS

Jun-17 2018E 2019E

Srei Infrastructure Finance

RiddhiSiddhi Bullions Ltd.

Muthoot Finance Ltd.

AGS Transact Technologies Ltd.

Vakrangee Ltd.

Hitachi Payment Services Pvt. Ltd.

BTI Payments Pvt. Ltd.

Tata Communication Payment Solutions Ltd.

0 2000 4000 6000 8000 10000 12000 14000

Jun-17 2018E 2019E

TATA COMMUNICATION PAYMENT SOLUTIONS LTD. 8497 10661 12842

BTI PAYMENTS PVT. LTD. 4293 5786 7312

HITACHI PAYMENT SERVICES PVT. LTD. 675 909 1148

VAKRANGEE LTD. 417 561 707

AGS TRANSACT TECHNOLOGIES LTD. 227 302 379

MUTHOOT FINANCE LTD. 207 279 352

RIDDHISIDDHI BULLIONS LTD. 128 170 214

SREI INFRASTRUCTURE FINANCE 3 10 40

 KEY PLAYERS

BROWN LABEL ATM WHITE LABEL ATM

‘Brown label' ATM are those Automated Teller

Machines where hardware and the lease of the ATM machine Automated Teller Machines (ATMs) set up,
is owned by a service provider, but cash management and VS owned and operated by non-bank entities are
connectivity to banking networks is provided by a sponsor called "WLAs".
bank whose brand is used on the ATM.

ATMs are owned and operated by non-bank

Banks outsource the ATM operations to a third party. entities but they are not doing
VS 'outsourcing-contract' from a particular bank.

The private company owns & operates the ATM machine, The private company owns &operates the ATM machine,
pays office rent. They negotiate with the landlord, electricity VS pays office rent. They negotiate with the landlord,
company, telecom company and so on. electricity company, telecom company and soon.

The bank (which has outsourced this work)

provides cash for that ATM. VS Sponsor bank provides the cash.

ATM has the logo of that bank

(which has outsourced this work).

VS WLAs do not have a logo. Not even of the sponsor bank.

They have no such compulsion to open ATMs in They have to compulsory open a few ATMs in

specific areas.
VS (tier 3 to tier 6) areas.

RBI is not involved directly. These outsourcing RBI is directly involved because these white label
companies have a contractual obligation with VS companies have to separately get license/permission from
their respective banks. the central bank to run a business.
 GROWTH DRIVERS

WLAs are found in rural areas WLAs are found in rural areas
as bank ATMs are found mostly as bank ATMs are found mostly
in metros and urban areas. in metros and urban areas.

WLAOs can tie up with other WLA works in rural areas by a

commercial banks for cash solar power without electricity
supply at WLAs. connection.

The expansion of ATM network Banks support the introduction

allows customers to withdraw of WLAs because these are likely
funds at more varied locations. to reduce the per-transaction
cost for the banks.

Due to WLAs, banks will not Customers of all banks in India

have to deal with the problems can enjoy services like cash
relating to maintaining and withdrawal, balance enquiry
running the payment channel. mini statement and pin change.

KEY CHALLENGES
 Acceptance of deposits are not permitted.
 Regular bill payments are not permitted.
 Purchase of Re-load vouchers for mobiles are not permitted.
 Difficult for customers to trust WLAs.
 A major concern is regarding the issue of failed transaction.
 Since the WLAOs will be a non-bank entity and will be running
purely on a profit basis, they may take a long time or completely
avoid timely payments on account of failed transactions
(Difficult to make profit as they need around 75-125 transaction per day)
 The financial viability of white label ATMs is under the scanner
due to their low interchange fee, and high operating costs.
 If there is a bank-managed ATM in the same area as a WLA, then
 the WLAs would be a victim of cannibalization.

FACILITIES PROVIDED BY WLAs

 WLAs accept international credit/debit /prepaid cards.
 The facility of Dynamic Currency Conversion (DCC) is provided for
 the use of international cards at WLAs if the operator so decides
to implement the DCC facility.
 Open 24/7 365 days.
 Any customer from belonging to any bank can use it.
 Every month, five transactions are free.
 Value added services like mobile recharge, utility bill payments etc.
 WLA had made personal banking more convenient by facilitating
 cash withdrawal facilities near to a large number of bank customers.

SOURCES
National Payments Corporation of India | Indicash: A TATA product | Innovationinbanking | Financial Express
 DECIMAL VIEW

RBI's main purpose to launch WLAs in India was to enhance the spread of ATMs in semi-urban and rural areas
(mainly in tier III to VI areas), where bank-owned ATM penetration was not growing. The slow growth in WLAs is
mainly due to lack of trust in these ATMs as compared to Bank ATMs. Many white label ATM operators were
forced to shut down ATMs in end of 2016 due to lack of cash availability in ATMs following demonetization. WLAS
are expected to grow at a CAGR of approximately 2.0% in India.

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