ATM outsourcing service provider, Tata Communications Payment Solutions, plans to provide value-added services to make White Label ATMs (WLAs) more viable.
The company has set up over 1,500 WLAs since June last year. WLAs are ATMs set up and operated by non-banking entities.
“We are witnessing better transactions than estimated. In some instances, they are similar to bank ATMs. Our strong focus on the right locations and innovative ways of deployment, such as neighbourhood formats, kirana stores and Porta Cabins ensures that the ATM rollout, especially in deeper geographies, is viable to operate,” said Sanjeev Patel, CEO, Tata Communications Payment Solutions Ltd (TCPSL).
A wholly owned subsidiary of Tata Communications, TCPSL plans to set up 15,000 WLAs by 2016 as mandated by the RBI.
The card-issuing bank pays a WLA provider an average industry interchange rate of ₹15 per cash transaction and ₹5 for balance inquiry for extending ATM service to its customers.
However, with lower volumes and the number of transactions in Tier-III to Tier VI cities, the economic viability of WLAs is under threat.
According to Patel, it takes anywhere between ₹20,000 to ₹50,000 to set up a WLA in such cities and they break-even under a year.
“We operate at a low cost with cheap rentals, open at kirana shops, and rely on advertisements to run a low-cost ATM. The average number of transactions depends on the location,” he said.
“There needs to be more interchange making it viable for both public and private sector banks. It has to be ensured there is sufficient money in the system to make it sustainable…Hence, we need more card holders, provide value-added services such as account to account transfers and pre-paid card top-ups….Acceptance of larger range of cards is also being discussed by the RBI,” Patel said.
Cardless transactionsPilots are on to offer cardless transactions, bill payments and statement requests. Companies are also increasing their revenues by selling advertisements to brands to make the business economically viable.
The company installed its first set of WLAs in partnership with Federal Bank and Axis Bank, and is in the process of adding one more sponsor bank soon, Patel said.
A sponsor bank manages cash for the operators assuring quality of cash.
Apart from Tata Communications Payments Solutions, six other companies authorised by the RBI to operate WLAs are: Muthoot Finance, Prizm Payments, Vakrangee, BTI Payments, SREI Infrastructure Finance and Ridhhi Siddhi Bullion Ltd which were authorised in May this year.