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Nearly two years after securing licences, Srei Infrastructure has started rolling out its white label or third-party ATMs (WLA).
To be branded as ‘Srei ATM’, these will focus on Tier-1 to Tier-6 towns as their primary target markets.
ANZ will be the settlement or sponsor bank.
The first such ATM came up at Krishnanagar in Nadia district of West Bengal, 112 km from Kolkata, earlier this month.
White label or third-party ATMs are owned and operated by non-bank entities. The ATMs can be accessed by card-holders of all banks.
According to Jennifer Vishnoi, Vice-President, White Label ATM Business, Srei, the target is to roll out 9,000 ATMs “pan-India”, by 2020. Immediate focus will be on Uttar Pradesh and Bihar.
Under the ‘1:3 scheme’ of the RBI, for every one ATM set up in Tier-1 and Tier-2 cities, three will be set up in Tier-3 to Tier-6 areas.
Accordingly, 6,750 ATMs (including 675 in Tier-5 and Tier-6 areas) will be set up in Tier-3 to Tier-6 areas; and the remaining 2,250 elsewhere.
Seven companies (excluding Srei) have so far rolled out 13,000-odd WLAs.
Viable model“We took two years to roll out the ATMs because a low-cost model had to be perfected. The model has to be viable enough to generate revenues and break even in the current circumstance,” Vishnoi told BusinessLine in an interview.
Interestingly, viability has been a prime issue in this segment, say industry analysts.
Huge running costs, coupled with lower interchange fees, have cropped up as issues. Interchange fees are charged by the bank whose ATM is used by a cardholder of another bank. At ₹15 per cash withdrawal and ₹5 per balance inquiry, the charges are low and render many ATM sites unviable. Typically, at least 60 to 65 transactions a day are required for WLAs.
Accordingly, Srei’s model involves getting around the bottlenecks with low space requirements (around 15-20 sq ft) and use of technology; rather than reliance on security guards.
“Of course, there will be some flagship ones (larger ones with lobby-like designs). But the focus will be on pushing the low-cost model,” she added.
Analysts indicate, Srei’s model may entail a 30 to 35 per cent cost-saving over competition.
Revenue generationAccording to Vishnoi, the aim is to ensure break-even with the current inter-change fees and sufficient footfalls.
She is confident of securing numbers with the Centre’s financial inclusion programmes being successful. Direct benefit transfers have also led to increased operations from otherwise dormant savings accounts in rural areas.
“We would also like to leverage the space in the ATMs for advertising revenues,” she added.
This apart, the company may leverage Sahaj’s network for pushing WLAs. “Other tie-ups are also being explored,” Vishnoi pointed out.
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