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.
