White Label ATMs

The Reserve Bank of India (RBI) has extended the validity of Vakrangee’s authorization to set up, own, and operate White Label ATMs in India.

What exactly is a White Label ATM?

  • ATMs are typically managed by banks. White Label ATMs, on the other hand, are owned and operated by non-banking entities.
  • Customers can use ATMs operated under this business model for banking transactions regardless of which bank they have an account with.
  • Under the Payment and Settlement Systems Act of 2007, the RBI approved the operation and inclusion of WLA ATM by non-banking organisations.
  • It was designed to help expand India’s ATM network, particularly in semi-urban and rural areas.

How does it function?

  • White Label ATM providers collaborate with banking networks to enable bank customers to use banking services such as cash withdrawals, bill payments, and cash deposits.
  • White Label ATM (WLA) operators charge card-issuing banks fees in order to provide this service to the bank’s customers.
  • A lending bank, a sponsor bank that handles settlements, and an ATM network provider are involved in the transaction process in White Label ATM operators.
  • The cash facility for the White ATM is provided by the Sponsor bank.

Significance of WLA: Financial Inclusion

  • Financial inclusion refers to the availability of financial services and adequate financing to low-income people and other vulnerable groups in society.
  • ATMs promote financial inclusion by providing customers with a variety of banking services at any time and in any location.

White Label ATM Operators in India

  • Non-banks set up and operate White ATMs in accordance with the RBI’s guidelines for using ‘other bank’ ATMs.
  • These ATMs accept all domestic debit cards and, depending on the location, offer the first five or three transactions per month for free.
  • Some companies that operate white label ATMs are listed below:
  • Indicash – India’s largest White Label ATM network responsible for ‘uberisation of ATMs.’
  • India1 Payments (BTI Payments Pvt. Ltd.)
  • Hitachi Payment Services Pvt. Ltd.
  • Tata Communications Payment Solutions Ltd.
  • Vakrangee Limited

Benefits of White Label ATMs

There are numerous advantages to using White Label ATMs:

  • White Label ATMs benefit customers because they eliminate the need to visit a bank branch on a regular basis. • ATMs are available 24 hours a day, seven days a week, including holidays.
  • Banks benefit from this because they do not need to keep a large staff/office (compared to a system without ATMs). It reduces their branch’s operational costs.
  • It allowed any bank to issue ATM cards that can be used at White Label ATMs.
  • WLA atm also provides mobile recharge, energy bill payments, and other value-added services.

Limitations of White Label ATMs

There are also a few limitations of White Label ATMs:

  • A major source of concern is the issue of failed transactions. In the event of a dispute, the dispute resolution method will include three entities: the WLA operator, the sponsor bank of the WLA operator, and the customer’s bank.
  • Customers will be discouraged by the cost issue because they will have to pay a fee to use the White Label ATMs because only a limited number of free transactions are permitted on the WLAs.
  • The financial viability of white label ATMs is questioned due to their low interchange charge and high operational expenses.
  • If a bank-managed ATM is located in the same area as a WLA ATM, the White Label ATMs may be unable to generate a profit.
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