Saturday, 31 December 2016



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


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


Description and Meaning of Brown Label ATMs

'Brown label' ATM are those Automated Teller Machines where hardware and the lease of the ATM

machine is owned by a service provider, but cash management and connectivity to banking networks is

provided by a sponsor bank whose brand is used on the ATM.

The `brown label' has come up as an alternative between bank-owned ATMs and 'white label' ATMs.

As in India white label ATMs were not allowed by RBI (in February, 2012, RBI has issued the draft

guidelines for introduction of white ATMs, but final approval has yet to come.), the concept of Brown

Label ATMs started picking up.

What is the Status of Brown label ATMs in India

In view of the high cost of ATM machines and RBI's guidelines for expansion of ATMs, the concept of

Brown Label ATM network is likely to expand at a brisk pace in next few years. In the recent years,

there is a visible shift in the way banks look at the ATM business. From the earlier model where banks

used to buy outright the ATM machines and bear the cost of service, they are now preferring brown

label ATMS i.e. where the machine and service is outsourced. There are indications that as many as

50% may soon be under this category.

However, after approval of white label ATMs, the bankers will review the expansion model for their


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