Background / White Label ATM in Canada and India

Background / White Label ATM in Canada and India :  

White label ATMs are popular in Canada.   Since 2006, some banks have been pressing with RBI to introduce white label  ATMs in India too.   On 14th February, 2012, RBI has issued  DRAFT  guidelines and asked the comments of the bankers and public in this regard.   Thus, these guidelines are still not applicable but are likely to be soon approved.

 Definition and Meaning of White Label  ATM -  India ?  or What is White Label ATM ? or What is WLA ?  

White Label ATM or White Label Automated Teller Machines or WLAs in India 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.    These white label automated teller machines (ATMs) will not display logo of any particular bank and are likely to be located in non traditional places. 

What is the purpose for introduction of White Label ATMs in India 

In India only Banks are allowed to set up ATMs.  Although between 2008 - 2011, there has been 30% growth in number of ATMs and by the beginning of 2012, we have about 87,000 ATMs in India, yet the penetration of ATMs in Tier III and Tier IV cities has been low and downtime of such ATMs has been high.  Thus, RBI is feeling that there is a need to expand ATM network, which can be done by only with the help of  private operators. 

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 

What Problems are Likely to be Faced by Bankers and Customers : 

Bankers are already sounding caution about the pitfalls of white label ATMs.  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 sponsor bank 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.   The second concern for customers will be the high cost they are likely to pay for use of such ATMs.