The central bank has not announced a policy change, but industry sources said it had been conveyed to deployers that they would now be evaluated on an annual basis with more realistic targets and the kind of cities (from tier-I to tier-VI) in which ATMs were put up. These targets are confidential and player-specific.
“The earlier targets were hard to meet. We also miscalculated as it is a capital-guzzling business and private equity may not continue to support us as in the past,” said the chief executive officer of a white-label deployer. Another sore point was that the central bank did not allow WLATM players to switchover to a different deployment scheme.
Of the eight WLATM players, Tata Communications Payment Solutions is the largest deployer with 8,290 ATMs, followed by BTI Payments (6,249), Vakrangee (4,506), Hitachi Payment Services (3,535), RiddiSiddhi Bullions (681), Muthoot Finance
(217), and AGS Transact (119), while Srei Infrastructure has exited the business. The number of ATMs in the country has fluctuated around 240,000 levels since demonetisation on the back of rising operational costs and the emergence of digital modes of payment. This has made the ATM channel unviable for all manner of deployers — banks, brown-label, and WLTAMs.
The WLATM business model was premised on the fact that customers will swipe on ATMs and deployers could pocket the interchange fee of Rs 15. The interchange is the payout by a card-issuing bank when you swipe at other banks’ ATMs (and this includes white-label units). The promise of a hike in the interchange fee to Rs 18 has also not materialised so far. The model was turned on its head when footfalls fell at these WLATMs and operating costs soared. Another blow was when banks
started to plonk their ATMs next to WLATMs to cut back on the interchange paid.
In effect, the poor deployment of WLATMs has tripped what the central bank sought to achieve back in 2012 when it noted: “While there had been a nearly 23-25 per cent year-on-year growth in ATMs, deployment has been predominantly in the tier-I and -II centres. There is a need to expand in tier-III and tier-IV centres.”