White Label ATMs
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This article is written by Rachit Garg from the University of Petroleum and Energy Studies. This is an exhaustive article which aims to give a brief introduction to the White Label ATMs in India and laws regulating them. 


The introduction of the Automated Teller Machine (ATM) has changed the way customers interact and perform financial activities with their banks. It is one of the most innovative technological advancements in the banking industry. 

ATM’s presence has revolutionized the banking process in India as the withdrawal of money has become easy. Customers no longer have to visit bank branches to withdraw cash and perform various other banking activities. 

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Types of ATM in India

  • Online ATM – These ATMs are connected to the bank’s database all time. In such a case, you can’t withdraw more than the balance in your account. 
  • Offline ATM – These ATMs are not connected to the bank’s database. So you will be able to withdraw beyond the balance in your account if it falls within the prefixed withdrawal limit. However, the bank may charge a penalty for the same. 
  • Onsite ATM – These ATMs are inside the compound of their respective banks.
  • Offsite ATM – These ATMs are located at various locations other than inside the bank’s premises.
  • White Label ATM – These ATMs are set up by Non-Banking Financial Companies.
  • Yellow Label ATM – These ATMs are provided for E-Commerce reasons.
  • Brown Label ATM – These ATMs are outsourced to the third party by the banks.
  • Orange Label ATM – These ATMs are for share transactions.
  • Pink Label ATM – These ATMs are for women use only.
  • Green Label ATM – These ATMs are for agricultural transactions.

What is a White Label ATM?

These are the ATMs (also known as WLA) that are regulated and established under the Payments & Settlements Act, 2007. These ATMs do not come under direct ownership and are not operated by the banks. Instead, these are maintained and operated by the private entities, that is, Non-Banking Financial Companies (NBFC). However, these ATMs are sponsored by a bank which ensures cash is stocked up in these White Label ATMs. Tata Communications Payment Solution is the first company to open WLAs in India authorised by the RBI. 

What is the difference between a bank and an NBFC?

NBFC is a company registered under the Companies Act, 1956. It is under the control of the Central bank of India, that is, the Reserve Bank of India. It is engaged in money lending activities along with various other activities carried out by banks like providing loans and advances, saving, credit facility, etc. It also provides services like the acquisition of shares, stocks, bonds, debentures and securities to the business corporation. However, the major factor that differentiates an NBFC from a bank is that it cannot accept deposits from the public. Moreover, it cannot issue demand drafts and cheques. 

What are the other facilities offered by the WLAs?

Along with the facility of cash dispensing, the WLAs offers the following features:

  • Account Information
  • Cash Deposit (The same is not allowed at the WLAs)
  • Regular Bills Payment (The same is not allowed at the WLAs)
  • Short Statement Generation
  • Cheque Book Request
  • PIN Change

The PSS Act, 2007

The Payment & Settlement System Act, 2007 makes the RBI the regulatory and supervisory body to look after the payment system in India. In order to open a WLA in India, a non-banking entity needs an authorization from the RBI under the act. 

Why the need for the White Label ATMs?

Banks initially owned and deployed their own ATMs in India. However, that has gone through a broad change recently. Banks have now started outsourcing their ATM operation activities (Deployment, maintenance, cash loading, and technology upgradation) in order to reduce their operational costs. 

Moreover, according to the studies done by the RBI, there are over 90000+ ATMs across India, the majority of them being in Tier I and Tier II centres. Its growth in India is relatively less than the other countries in the world. India has 77 ATMs per million population which is much lower than countries like Malaysia and Thailand, which have 200 ATMs per million. Moreover, the US has 1200 ATMs per million population. 

In order to cover up the shortfall and ensure deep penetration of ATMs in other centres (Tier III to VI), RBI in 2012 permitted non-banking entities to set up white label ATMs in India. These entities need to be registered under the Companies Act, 1956 in order to set and operate ATMs in India. These entities who set up, own and operate ATMs are termed as White Label ATM Operators (WLAO). Their role is to provide banking services to customers on the basis of the cards (debit, credit, prepaid) issued by their banks and also involves the acquisition of transactions of banks’ customers. They also ensure connectivity with the existing authorized ATM Network Operator/ Card Payment Network Operators. 

Criteria and Guidelines under the PSS Act 2007

Eligibility criteria for WLAO are:

  • Applicant’s Memorandum of Association (MOA) must contain the proposed activity of operating the WLAs.
  • The entity must have a net worth of Rs. 100 crore as per the last audited balance sheet.
  •  It is required for the entity to maintain a net worth of Rs. 100 crore at all times.

The non-bank entity/WLAO will have the liberty to choose the place of the WLAs.

The authorization given by the RBI to set up the WLAs will be valid for the duration of a year. Moreover, the number of WLAs intended to be installed along with the scheme needs to be indicated at the time of the application. There are three schemes as of now:

Scheme A

Year 1 – the WLAO must establish 1000 WLAs.

Year 2 – minimum twice the number of WLAs in year 1 must be established.

Year 3 – minimum three times the number of WLAs established in year 2.

The 3:1 must remain applicable according to which, for every 3 WLAs established in Tier III to VI centres, 1 has to be established in Tier I to II centres. Moreover, out of the number of WLAs established in Tier III to VI centres, it is necessary that 10% of it should be installed in Tier V to VI centres.

Scheme B

According to this scheme, a minimum of 5000 WLAs have to be established every year for a period of three years.

In this scheme, the ratio of 2:1 is applicable, according to which, for every 2 WLAs established in Tier III to VI centres, 1 has to be established in Tier I and II centres. Moreover, out of the number of WLAs established in Tier III to VI centres, a minimum of 10% pass have to be established in Tier V to Tier VI centres.

Scheme C

According to this scheme, a minimum of 25,000 WLAs in the first year and at least 25,000 more in the next two years have to be established.

In this scheme, Ratio of 1:1 has to be maintained, according to which, out of the WLAs established in Tier III to VI centres, it is necessary that 10% of it should be installed in Tier V to VI centres. 

The WLAO is allowed to display advertisements and offer value-added services. However, these advertisements placed on the ATMs are subject to the Advertising Standards Council of India (ASCI) regulations. The same also has to be confirmed by the regulatory framework laid down by RBI, IRDA, SEBI, and PFRDA. Moreover, such advertisements must disappear when the customer commences a financial transaction to ensure he is not distracted in the process.

WLAO are not permitted to charge the customers directly for using the WLAs. However, they are entitled to a fee by the bank using the ATM resources. The customer can perform the first three transactions at any WLAs for free of cost. However, after that, a transaction fee of Rs. 15 is charged along with Rs. 5 Balance enquiry fee. This is the commission paid by the sponsor bank to the WLAO.

Roles and Responsibilities


WLA Operator (WLAO)

WLAO is allowed to have more than one sponsor bank. It would settle all the transactions serviced by the sponsoring bank. The sponsor bank must be the member of the Card Payment Network Operators/ATM Network Operators which is authorised by the RBI. Moreover, it should be a member of the RTGS. 

It will be the responsibility of the Sponsor Bank to handle cash management at the WLAs. Moreover, the cash in the WLAs will be owned by the WLAO but the responsibility of ensuring the genuineness and quality of the cash loaded will be of the sponsor bank. Also, the WLAOs or its agent must not have at any point access to the cash at the WLAs.

Moreover, the maintenance and service of WLAOs is the sole responsibility of the WLAO.

There should be a Tri-partite Service Legal Agreements (SLAs) between the ATM Network Operators/ Card Payment Network Operators, Sponsor Banks and the WLAO to address the issue regarding the settlement of customer complaints relating to failed ATM transactions and inter-bank settlements at the WLAs. 

FDI in White Label ATMs

Recently, the central government of India has approved 100% Foreign Direct Investment on the White Label ATMs. This means that any foreign company can sign an agreement with a service provider and a Sponsor Bank to open a WLA in India. 

New Guidelines

In March 2019, the RBI issued new guidelines for the WLA Operators. It has been done under Section 10(2) read along with Section 18 of the Payment and Settlement Act, 2007. 

The WLA Operators have been allowed to:

  1. Buy wholesale cash directly from the Reserve Bank and Currency Chests against full payment for above a threshold of 1 lakh pieces ( and in multiple thereof) of any denomination.
  2. Source cash from any of the scheduled banks. This also includes the Cooperative banks and Regional Rural Banks.
  3. Offer interoperable Cash Deposit along with bill payment services. The same is subject to certification and technical feasibility by National Payments Corporation of India (NPCI).

Moreover, WLAOs have been given permission to source cash from the retail outlets.

Sponsor banks are allowed to issue, in partnership with WLAOs, co-branded ATM cards. Also, they can extend the benefits of onsite transactions to their WLAs as well.

Problems with the White Label ATMs

The first and foremost concern about the WLAs by the customers is the possibility of failed transactions. The WLAO, being a private entity and operating just with the intentions of making profits, might take longer to resolve customer grievances. Secondly, the customers are also concerned with the high cost they have to pay to use these ATMs. 

Even if White Label ATMs have its own drawbacks, it cannot be neglected that it is the only solution to expand the establishment of ATMs in India, especially in rural and semi-urban areas. It has been noticed that more people are using the banking facilities and demanding it and there aren’t sufficient ATMs for its customers. Moreover, recently many ATMs have been closed down due to the new norms by the government, making it more expensive for the banks to do cash management and security at these ATMs. In such a situation, the role of WLA operators becomes really important. 


The invention of the Automated Teller Machine (ATM) can be considered to be one of the most crucial steps towards the advancement of technology in the banking sector. With the increase in financial transactions, the requirement of ATMs also increases. While it can be seen that the requirement is being met in Tier I to Tier IV centres but it is not being met in Tier V to VI centres. In such a situation, RBI comes into play and allows private players to set up ATMs in India and comes up with schemes making it mandatory for them to set up a number of ATMs in the rural region. However, this strategy can be really useful in managing the situation. Moreover, the sponsor banks get the opportunity to cut the operational costs and focus more on other areas of services offered by them.

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