Decoding White Label ATMs in India: How Do They Differ From Traditional ATMs?

In a recent milestone for India's banking landscape, Hitachi Payment Services, a subsidiary of Japan-based Hitachi Ltd, introduced the nation's inaugural UPI-ATM, named the Hitachi Money Spot UPI ATM, in partnership with the National Payments Corporation of India (NPCI). This groundbreaking event has piqued curiosity about White Label ATMs (WLAs) and how they differ from traditional Automated Teller Machines (ATMs). This article delves into the significance of White Label ATMs and their distinctive features, ultimately showcasing the broader mission of financial inclusion.

Understanding White Label ATMs (WLAs)

White Label ATMs (WLAs) are ATMs that are established, owned, and operated by non-banking entities. These non-bank ATM operators are authorized under the Payment & Settlement Systems Act, 2007, by the Reserve Bank of India (RBI). WLAs play a unique role in India's financial ecosystem, providing an alternative source of ATMs to traditional bank-owned machines.

Contrasting WLAs with Regular ATMs

The primary distinction between WLAs and regular ATMs is their ownership and operation. Regular ATMs are set up, owned, and operated by traditional banks, while WLAs are established and managed by non-banking entities. Despite this fundamental difference, for the average customer, using a White Label ATM is comparable to using an ATM belonging to a bank. The RBI ensures that the user experience remains consistent.

The Evolution of White Label ATMs

The concept of White Label ATMs was introduced in India during the fiscal year 2013-14. The motivation behind this initiative was to promote financial inclusion by increasing the geographical presence of ATMs, particularly in semi-urban and rural areas. The expansion of White Label ATMs aimed to enhance customer service by offering convenient access to banking facilities where traditional banks had limited reach.

India's Pioneering White Label ATM

India witnessed the launch of its first White Label ATM in June 2013 when Tata Communications Payment Solutions (TCPS), a wholly owned subsidiary of Tata Communications, unveiled a WLA in Chandrapada, a tier-V town near Mumbai. This pioneering venture was branded as 'Indicash.' TCPS received approval from the RBI to commence white-label ATM operations in May 2013. Notably, TCPSL collaborated with national and regional banks to execute its rollout strategy. In this regard, it formed a partnership with Federal Bank, which was designated as a sponsor bank responsible for cash operations, dispute resolutions, and regulatory reporting.

Indicash ATMs provided a wide range of services, mirroring the offerings of traditional bank ATMs. These services encompassed cash withdrawals, balance inquiries, mini-statements, and PIN changes. Furthermore, Indicash ATMs accepted all domestic debit cards, offering the first five transactions each month free of charge, in compliance with RBI regulations for 'Other Bank ATMs.'

One notable feature of the Indicash ATMs was their design, addressing cardholders' concerns. Unlike some older ATMs, these machines were of the "dip" variety, ensuring that cards would not be swallowed during transactions, providing added peace of mind for customers.

The introduction of White Label ATMs in India has been a significant step towards expanding financial inclusion, especially in underserved areas. WLAs offer an additional avenue for access to banking services and cash transactions, contributing to the government's broader mission of financial empowerment. With innovations like the Hitachi Money Spot UPI ATM, India's financial landscape continues to evolve, making banking more accessible to all.