RBI says no to white-label ATMs

The Reserve Bank of India (RBI) seems reluctant to give its go-ahead for setting up white-label (or no name) ATMs by corporates, banking sources said.

White-label ATMs are the ones that are not only owned and operated by non-bank entities but also branded separately by them. It means these ATMs are not branded after any bank's name.

The sources said the RBI is of the view that only banks can own ATMs so that the flow of funds can be accounted for, well regulated and monitored.

On the other hand, white-label ATMs are owned and operated by independent entities including corporates, and they do not come under the jurisdiction of the banking regulator.

The banking regulator also feels allowing corporates to own ATMs will result in their virtual entry into banking, which goes against the current policies for entry into banking.

The RBI is also worried that white-label ATMs will raise the cost of banking for retail customers, as each white-label ATM operator will have its own cost structure, which may not adhere to the overall domestic banking structure. This has been the experience internationally, as well.

Customers of all banks having arrangements with payment service providers like MasterCard of Visa can avail of white-label ATMs but will have to pay usage charges.

At present, Euronet owns and operates a large network of ATMs.

But these ATMs are branded as ATMs of banks acting as sponsors. The sponsor banks provide the currency notes required for loading the ATMs.

Technology services providers such as FSS, e-funds and US-based Euronet and companies like Reliance Capital have evinced interest in setting up white-label ATMs. Australia-based Banktech group is reported to have set up shop in India with plans to offer services in the ATM deployment and transaction processing market through white-label ATMs.

In several countries, including the US and Canada, white-label ATMs are deployed by non-bank corporates and service providers. These machines do not carry names of banks like the ones set up by Euronet, which are called 'convenience' ATMs.

Some global ATM services providers are in talks with banks in India to set up a joint venture subsidiary for rolling out white-label ATMs.

Globally, white-label ATMs are deployed by third parties that make their machines available to bank customers and earn money through per transaction charge.

There are over 16,000 ATMs in India against 70,000 bank branches. The banking sector expects three ATMs for every one branch in the next five years.