RBI Forms Panel to Review Fee Structure for White-Label ATMs

The Reserve Bank of India (RBI) has established a committee to review the fee structure of white-label ATMs (WLAs). This panel aims to evaluate current policies and recommend a balanced and sustainable model for all stakeholders.

Key Objectives and Challenges

Assessment Areas

The committee will analyze the fee structure, existing ATM infrastructure, and international best practices.

Main Challenge

The primary issue is the interchange fee, which is currently the same for both bank-operated ATMs and WLAs. This has led to unsustainable operations due to reduced ATM transactions with the rise of digital banking.

Industry Context and Market Projections

Market Growth

India’s ATM market is projected to grow at a compound annual growth rate (CAGR) of 9.2% from 2024 to 2032.

Stakeholders

The committee includes representatives from leading banks, ATM manufacturers, and the National Payments Corporation of India (NPCI), and is chaired by Indian Banks’ Association CEO Sunil Mehta.

Operational and Regulatory Background

RBI Initiatives

Since 2012, the RBI has allowed non-banking entities to establish WLAs to increase the number of ATMs, particularly in rural areas.

Regulatory Changes

In 2016, WLAs were permitted to source cash from retail establishments, and in 2019, they were allowed on-tap authorization.

Fee Proposals

WLA operators have suggested raising the interchange fee to ₹30 for financial transactions and ₹10 for non-financial transactions, along with considering access or convenience fees.

Services and Limitations

WLA Services

WLAs offer account information, mini/short statement generation, cash withdrawals, and PIN changes.

Limitations

WLAs do not provide cash deposits, regular bill payments, or mobile recharge services, unlike bank ATMs which offer additional services like personal loan applications, tax payments, railway ticket booking, and more.

RBI’s Long-Term Vision

Enhancing Retail Payment Systems

The RBI has been working since 2018 to encourage more participation in retail payment platforms, including WLAs. The ‘on tap’ authorization is part of this effort to diversify risk, foster innovation, and boost competition.

Public Consultation

The RBI has engaged in public consultations to gather feedback and minimize concentration risk in retail payment systems, aiming to expand the geographical spread of ATMs and improve customer services, especially in rural areas.