White label ATM service providers in the country are looking to boost their business by providing more value-added services, cutting costs and selling advertisements.

White label ATMs (WLAs) are set up, owned and operated by non-bank entities. The Reserve Bank of India had given approval to 12 companies — including Tata Communications Payment Solutions, Prizm Payment Services, Muthoot Finance, Vakrangee Ltd, BTI Payments and Srei Infrastructure Finance — to roll out WLAs largely in Tier III to Tier VI cities.

Though the operating costs in non-metro regions are lower, the low number of transactions, difficulty in getting cash replenishment and power outages make it difficult for the business to become economically viable.

Hence, these ATMs tie upwith local shops, selling advertisements on their machines, thereby aiding revenues.

BTI Payments, owned by BankTech Group and ICICI Ventures, has set up ATMs at convenience stores, railway stations and petrol pumps. The company, which operates in a few districts of Tamil Nadu and Karnataka, has set up 100 ATMs in the last three months.

Value-added services According to K Srinivas, Managing Director and CEO, BTI Payments, “We are also trying to build a sachet model for WLAs instead of big spaces, air conditioning, etc ... We are looking at more value-added services such as mobile top-ups, and cross-selling products such as insurance.”

The average number of daily transactions at a BTI ATM is 60-65. The WLA operators are allowed to levy the same charges that banks do. Currently, banks are not allowed to charge customers for the first five transactions in other bank ATMs. Beyond that, some banks levy ₹15 for every cash withdrawal transaction and ₹5 for balance enquiry.

While the initial trends show that the transactions are low, as the ATM penetration increases, the average number of transactions should go up, said Shrihari Bhat – Regional Managing Director – India, Fidelity Information Services.

Also, the WLAs need not clock the same number of transactions as those deployed by banks, which typically need 125-150 transactions per day to break even, he added.

The operational costs of WLAs are much lower since the space, cash, electricity and security are all provided by the deployer and they leverage on their existing infrastructure. These ATMs are likely to breakeven if 50-75 transactions per day are achieved.

Tata Communications Payment Solutions Ltd (TCPSL), which has set up over 1,500 WLAs since June last year, has also started pilots of its value-added services, such as utility bill payments and mobile recharge, among others, to make the business more viable.

Similarly, with about 30 ATMs so far, Muthoot Finance would add about 1,000 WLAs in the first year itself, followed by 2,000 in the second year and about 6,000 in the third. It needs to open 9,000 ATMs in three years as mandated by the RBI.

Muthoot also plans to set up exclusive counters at select centres to provide services such as money transfer, foreign exchange, air travel ticketing and bill payments, the company had said in a statement in May.

According to Sanjeev Patel, CEO at TCPSL, “There needs to be more interchange making it viable for both public and private sector banks. It has to be ensured that there is sufficient money in the system to make it sustainable…”

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