De-jargoned | White label ATM

ATMs set up, owned and operated by a non-bank entity will be known as white label ATMs

Non-banking financial companies (NBFCs)—Muthoot Finance Ltd and Srei Infrastructure Finance Ltd—are reported to enter the white label automated teller machines (ATMs) space. On 19 October, Reserve Bank of India (RBI) notified that it has extended the last date of submission of applications for authorization of white label ATMs till 31 December. For users, white label ATMs would act like any other existing bank ATM.

What is a white label ATM?

ATMs set up, owned and operated by a non-bank entity will be known as white label ATMs. These ATMs will have the same features like any other bank ATM, except that they will not have the label of a particular bank on it. Bank ATMs you use at present have two parties involved—a bank that sets up, owns and operates an ATM and the authorized payment network operator such as Visa and Mastercard. For white label ATMs, there will be three parties involved: non-bank entity that will set up, own and operate it; a sponsor bank for cash management purpose, funds settlement and customer grievance redressal; and an authorized payment network operator. Any non-bank entity that maintains a minimum net worth of 100 crore at all times can apply for white label ATMs.

Look forward to more ATMs

While travelling to remote locations, you may have faced problems in terms of availability of ATMs. But that problem may soon get solved. RBI has put conditions on opening white label ATMs in such a way that non-bank entities will have to open the maximum number of ATMs in tier III and tier VI cities, including towns and villages.

No extra fee for you

The RBI has notified that a non-bank entity can charge the interchange fee payable to the acquirer bank under the bank owned ATM scenario. For instance, if you are an X bank customer and have been using your debit card at Y bank’s ATM, X bank has to pay approximately 18 per transaction to Y bank as interchange fee. In case of white label ATMs, this fee will go to the non-bank entity.

However, the charges won’t be passed to you. White label ATM operators are not permitted to charge you directly for the use of white label ATMs. So you won’t have to shell out any extra money for using these ATMs. The rule of five free transactions at other bank ATM and there after being charged on every transaction is applicable to white label ATMs too. In case of failed transaction, the regulatory guidelines relating to compensation for failed transactions at bank ATMs would apply to the transactions done at white label ATMs.