Tata Communications Payment Solutions Ltd (TCPSL) expects the customer base on its white-label teller machines — Indicash — to nearly double by the end of the calendar year.

According to Sanjeev Patel, Chief Executive Officer (CEO), TCPSL, over 25 per cent of its existing customer base is currently operating on this model. This is expected to increase to 40 per cent by December 2019, primarily supported by the rollout of its flexible plug-and-play model, which can help banks and finance companies instantly expand their ATM network at less than one-third the cost of deploying brown-label ATMs.

“Some of the recent guidelines of the Reserve Bank of India (RBI) have led to an increased cost of operations for the ATM industry, and as a result, not many people are deploying ATMs any longer. We, as white-labelled operators, are looking at replacing the bank-led model with a private-led model,” Patel told BusinessLine .

Under the plug-and-play model, banks and finance companies will be able to leverage the existing network of over 8,000 Indicash ATMs at zero-capex investment, through a co-branding arrangement.

Nascent market

According to Patel, while a number of ‘younger banks’ are adopting the plug-and play-model readily — because of the convenience offered — it is still a nascent market in India. Only 25 per cent of white-label ATMs are co-branded by banks, as compared to close to 75 per cent in some western countries.

Indicash has tied up with a number of younger banks, such as the Paytm Payments Bank, for around 1,000 ATMs, as well as a host of other banks and finance companies, including Bank of India (BOI), Tata Asset Management, Federal Bank, Digi Bank, Suryoday Bank, The Nainital Bank, Solapur Janata Sahakari Bank and HSBC, among others.

While the period immediately following demonetisation saw a major shortage of cash supply in the market, adversely affecting the ATM industry, cash continues to be the most convenient way of transactions, particularly in the semi-urban and rural areas, Patel said.

“There was a hope that people would move towards digital transactions, but as the cash supply has become regular, the number of ATM transactions has not only reached the pre-demonetisation level but has exceeded it,” he said.

Deploying ATMs

However, though the number of cash transactions has gone up, there has not been a rise in deployment of ATMs.

According to him, the country’s ATM network needs to be ramped up from the existing 2.38 lakh, as of October 2018, to 4 lakh ATMs in the next two years, to address cash accessibility challenges. “While there has been a huge number of customers coming in through the Pradhan Mantri Jan Dhan Yojana, there has not been that much addition of ATMs in the last two years. These customers need to be serviced,” he said.

The government and the RBI should provide incentives for people to deploy more ATMs, by ensuring sustained cash supply and increasing interchange rate.

The interchange fee, which is the amount paid by one bank to the other when its customer uses the latter’s ATM network, has remained static at ₹15 per transaction since the past 5-6 years.

“The government and regulator should make it worth our while to deploy more ATMs to serve the rural parts of the country and that will require banks to pay out higher interchange,” he said.

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