White Label ATMs

1.What is White label ATM?White Label ATM or White Label Automated Teller Machines or WLAs will be owned and operated by Non Bank entities.From such White Label ATM customer from any bank will be able to withdraw money, but will need to pay a fee for the services.
They will provide the banking services to the customers of banks in India, based on the cards (debit/credit/prepaid) issued by banks.

Note: The extant guidelines on five free transactions in a month as applicable to bank customers for using other bank ATMs would be inclusive of the transactions effected at the WLAs.

2. What is the purpose for introduction of White Label ATMs in India?The objective of permitting non-banks to operate white label ATMs was to enhance the spread of ATMs in semi-urban and rural areas, where bank-owned ATM penetration has not been growing.

3.Who will benefit from White Label ATMs?The white label automated teller machines are likely to benefit customers as well as banks.With the expansion of ATM network, customers will be able to withdraw funds at more locations which will be convenient and located near to their home or place of work.
Banks too support introduction of white label ATMs as such machines are likely to reduce pre-transaction cost for them and will be free from the problems relating to maintaining and running such a payment channel

4.Which is the first non-bank entity to launch first White Label ATM in India?Tata Communications Payment Solutions Ltd. (TCPSL), a subsidiary of Tata Communications, rolled out the first-ever white label Automated Teller Machines (ATMs) network under the brand Indicash.

The first Indicash ATM was inaugurated at Chandrapada, a rural village in Thane district, Maharashtra.

5.What Problems are likely to be faced by Bankers and Customers?Bankers are already sounding caution about the pitfalls of white label ATMs:1. The first and foremost concern for customers will be the inconvenience they may feel in case of failed transactions on WLAs.In such cases the dispute resolution mechanism will involve three entities — the WLA operator, the sponsorbank of the operator, and the customer's bank.
The WLA operators being non bank entities and running purely on profit basis may take longer time or avoid payments on account of failed transactions.
2. The second concern for customers will be the high cost they are likely to pay for use of such ATMs.

6. Four non-bank entities to set up white label ATMs:The Reserve Bank of India (RBI) has permitted four non-bank entities to set up white label ATMs in India.The RBI has issued Certificate of authorisation to 1. Tata Communications Payment Solutions Ltd.2. Prizm Payment Services Pvt. Ltd.3. Muthoot Finance Ltd., and 4. Vakrangee Ltd. for setting up and operating white label ATMs.


Specific Criteria and guidelines for a non-bank entity:
1. The eligibility criteria for WLA Operators (WLAO) would be as under:
i. The Memorandum of Association (MOA) of the applicant entity must cover the proposed activity of operating WLAs.
ii. Non-bank entities must have net worth of at least Rs 100 crore as per the last audited balance sheet.
iii. The net worth of at least Rs 100 crore has to be maintained at all times.

2. The authorised non-bank entity (henceforth referred to as WLA Operator or WLAO) would have the freedom to choose the location of the WLA.

3. The authorisation for setting up a WLA operation under the proposed guidelines would be initially valid for a period of one year.The scheme and number of WLAs sought to be installed would need to be indicated at the time of application.

The details of the schemes are as under:

Scheme Ai. Year -1 minimum of 1000 WLAsii. Year -2 minimum of twice the number of WLAs installed in Year 1 andiii. Year -3 minimum of three times the number of WLAs installed in Year 2The ratio of 3:1 would be applicable, i.e. for every 3 WLAs installed in Tier III to VI centres, 1 WLA can be installed in Tier I to II centres. Out of the 3 WLAs installed in Tier III to VI centres, a minimum of 10 % should be installed in Tier V & VI centres.

Scheme B: A minimum of 5000 WLAs every year for three years.
The ratio of 2:1 would be applicable, i.e. for every 2 WLAs installed in Tier III to VI centres, 1 WLA can be installed in Tier I to II centres. Out of the WLAs installed in Tier III to VI centres, a minimum of 10 % should be installed in Tier V & VI centres.

Scheme C: A minimum of 25,000 WLAs in the first year and at least another 25,000 in the next two years.
The ratio of 1:1 would be applied under this scheme. Out of the WLAs installed in Tier III to VI centres, a minimum of 10 % should be installed in Tier V & VI centres

4. Only cards issued by banks in India (domestic cards) would be permitted to be used at the WLAs in the initial stage.

5. Acceptance of deposits at the WLAs, by the WLAO would not be permitted.

6. The WLA Operator would not be entitled to any fee from the card issuer-bank other than the "Interchange" fee payable to "acquirer" bank under the bank owned ATM scenario.

7. While the WLA operator is entitled to receive a fee from the banks for the use of ATM resources by the banks customers, WLAs are not permitted to charge bank customer directly for the use of WLAs.