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RBI brings white label ATMs under banking ATM guidelines, lets them get cash from other banks

We missed this earlier.

The Reserve Bank of India now allows White Label ATM operators (WLAO) to get cash “above a threshold of 1 lakh pieces of any denomination” directly from RBI offices and currency chests, and any scheduled banks. It will no longer have to be dependent on the sponsor banks to get the cash for its ATMs.

White Label ATMs are ATMs owned and operated by non-bank entities, but provide services to banking users via the issuing bank cards. WLAs cannot charge bank customers for their usage, but their operators can receive a fee from the banks for the usage of the ATM. WLAs also do not take deposits.

As per RBI’s latest notification, WLAOs can now offer

  • interoperable cash deposit (subject to the NPCI’s certification and study of technical feasibility)
  • bill payment services
  • Advertise non financial products and services on the ATM (not during a transaction) and in the premises

In the same notice, the RBI said that banks could now issue co-branded ATM cars with authorised WLAOs and extend “on-us” transactions to their White Label ATMs. It added that “All guidelines, safeguards, standards and control measures applicable to banks relating to (a) currency handling, and (b) cyber-security framework for ATMs, shall also be applicable to the WLA Operators.”

Interchange fee responsible for slow WLA deployment

The RBI has been meaning to look at overhauling guidelines around WLAs since at least 2017, when it said that it wanted to investigate the reason for their slow deployment. Since then, WLAOs have been warning that the ATM interchange fee – the fee paid between banks/financial institutions to accept card transactions – has been responsible for the slow growth and deployment of WLAs. This fee was slashed from Rs 18 to Rs 15.

During September 2017, multiple WLAOs told ET that cash was not back in circulation after the demonetisation of Rs 500 and Rs 1000 notes in November 2016, and that there was a divide between the cash availability in rural and urban areas. Two and a half years later, WLAOs are still struggling with high transaction and operational costs stating that an increase in the fee could help with the costs, BloombergQuint reports.

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Earlier this week, WLAO Tata Communications Payment Solutions, which runs WLA Indicash, has now signed an agreement with smaller banks and digital wallet providers like Paytm to co-brand and offer its WLA services to these players. Other operators in this space include BTI Payments, CMS Info Systems, Hitachi Payment Services, Vakrangee etc.

Our digital payments coverage here.

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