Money & Banking

Cost-effective micro ATMs gain traction

Surabhi Mumbai | Updated on September 25, 2021

The number of micro ATMs deployed by banks stood at 4.94 lakh by August-end

 

Micro ATMs have been gaining traction steadily even as the traditional ATM model faces challenges amid cost and infrastructure-related issues.

According to RBI data, the number of micro ATMs deployed by banks stood at 4.94 lakh by August-end, a 60.9 per cent increase compared to the 3.07 lakh deployed a year ago.

In contrast, there were 2.41 lakh ATMs by August-end, a 3.4 per cent increase from 2.33 lakh deployed last August.

“Micro ATMs, through business correspondents (BCs), are a cost-effective retail model of banking vis-à-vis the more sophisticated ATM operations,” said the RBI’s Booklet on Payment Systems in January. Fino Payments Bank had the largest network of micro-ATMs in the country, with 2.44 lakh micro ATMs by July, followed by State Bank of India with 43,960 such devices.

With the surge in AePS transactions in recent years, along with the Covid pandemic, micro-ATMs have been gaining more popularity.

This is also reflected in cash withdrawals from micro ATMs, which amounted to ₹26,830 crore in August this year, compared to ₹19,513 crore a year ago.

Fintechs are also working on micro ATMs as they try to expand the market by offering financial services to the unserved and underserved population.

“Micro ATMs are important as they are the touch point to acquire and support the user. That is the onboarding practice,” said Ram Shriram, Founder and CEO, Mahagram.

Unlike its name, a micro ATM cannot store cash like a traditional ATM, but can be used by the merchant to authenticate the customer and physically dispense cash or take deposits.

It is a portable device that can be used by a merchant or business correspondent to connect with their bank, authenticate users, and perform financial transactions.

Many fintechs and banks are also partnering to provide banking services and cash withdrawals through micro-ATMs. PayPoint India and Bank of Baroda recently announced a tie-up to widen the reach of banking services.

PayNearby has partnered with Visa and RBL Bank to launch SoftPoS and mPOS for its over 15 lakh retail network.

Published on September 24, 2021

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