White Label ATMs | 28 Jul 2023

Source: PIB

Why in News?

The Reserve Bank of India (RBI) has taken significant steps to promote ATM penetration, especially in Tier III to VI centres, by permitting non-bank companies to set up, own and operate White Label ATMs (WLAs).

  • These WLAs provide various banking services to customers based on cards issued by banks, and the RBI has implemented measures to improve their viability and functioning.
  • As of now, four authorised non-bank entities are operating White Label ATMs in the country.

What are White Label ATMs (WLAs)?

  • About:
    • ATMs set up, owned and operated by non-banks are called WLAs.
    • Non-bank ATM operators are authorised under the Payment & Settlement Systems Act, 2007 by the RBI.
    • They provide banking services to customers using debit/credit/prepaid cards issued by banks.
    • Besides dispensing cash, WLAs offer services like account information, cash deposit, bill payment, mini statements, PIN change, and cheque book requests.
  • Steps to Enhance WLA Presence and Viability:
    • Cash Sourcing Flexibility:
      • WLAs are allowed to source cash from retail outlets to address cash sourcing constraints.
        • Following the demonetization (Rs 500 & Rs 1000 Bank Notes), as WLAs are having difficulties in sourcing cash from their sponsor bank(s).
      • WLA operators can buy wholesale cash directly from the Reserve Bank and currency chests.
      • They can also source cash from any scheduled bank, including Cooperative Banks and Regional Rural Banks.
    • Expanded Services and Partnerships:
      • WLAs are permitted to offer bill payment and interoperable cash deposit services.
      • They can display advertisements for non-financial products/services, enhancing revenue streams.
      • Banks can issue co-branded ATM cards in partnership with authorized WLA operators.
      • This allows WLAs to facilitate 'on-us' transactions, increasing their attractiveness to customers.
    • On-Tap Authorization:
      • RBI introduced on-tap authorization for WLAs to encourage more non-bank players to enter the ATM industry.
      • This streamlined approval process simplifies WLA establishment and fosters greater competition.
    • Driving ATM Penetration:
      • The focus is on expanding ATM penetration in Tier III to VI centres to improve banking accessibility in underserved areas.
      • WLAs play a crucial role in achieving this objective, offering convenient banking services to a broader customer base.
    • Facilitating Consumer Complaints and Protection:
      • The Consumer Education and Protection Department of RBI addresses complaints against WLAs.
        • From April 2022 to June 2023, 98 complaints were received and handled by the Consumer Education and Protection Cells (CEPCs) of RBI.
      • RBI has undertaken various steps to promote education and financial literacy, with one of the initiatives being the National Strategy for Financial Education (NSFE) 2020-2025.

What are the Different types of ATMs?

Type of ATM Description
  • Brown Label ATM
  • ATMs where the hardware and the lease of the machine are owned by a service provider, but the cash management and connectivity to banking networks are provided by a sponsor bank.
  • They have the branding of the bank.
  • Orange Label ATM
  • ATMs provided for share transactions.
  • They are mainly used by investors and traders for buying and selling stocks and securities.
  • Yellow Label ATM
  • ATMs are set up for the purpose of e-commerce.
  • They are mainly used by online shoppers and merchants for making payments and purchases.
  • Pink Label ATM
  • ATMs monitored by guards who ensure that only women access these ATMs. They are set up to provide safety and convenience to women customers.
  • Green Label ATM
  • ATMs are provided for agricultural transactions.

They are mainly used by farmers and rural customers for various banking needs.