Financial Inclusion in India and Its Challenges

What are White Label ATMs?


From UPSC perspective, the following things are important :

Prelims level: White Label ATM

Mains level: Financial inclusion


The Reserve Bank of India (RBI) has extended the validity of authorization issued to Vakrangee to setup, own and operate White Label ATMs in India.

What is White Label ATM?

  • Usually ATMs are managed by banks. But White Label ATMs are owned and operated by non-banking entities.
  • ATMs operated under this business model allow customers to use them for banking transactions regardless of the bank they have an account with.
  • RBI approved the operation and inclusion of WLA ATM by non-banking organisations under the Payment and Settlement Systems Act of 2007.
  • It was introduced to expand India’s ATM network, especially in semi-urban and rural areas.

How does it work?

  • White Label ATM companies work with banking networks to enable bank customers to use banking services like withdrawing funds, paying bills and depositing cash.
  • White Label ATM (WLA) operators’ charge card-issuing bank fees to provide this facility to the bank’s clients.
  • The transaction process in White Label ATM operators consists of a lending bank, a sponsor bank that handles settlements and an ATM network provider.
  • The Sponsor bank provides the cash facility for the White ATM.

Significance of WLA: Financial Inclusion

  • Financial inclusion is concerned with the availability of financial services and adequate financing to low-income individuals and other vulnerable segments of society.
  • ATMs promote financial inclusion and provide customers with various banking services at any location and time.

White Label ATM Operators in India

  • Non-banks set up and operate White ATMs as per the rules laid down by RBI for using ‘other bank’ ATMs.
  • These ATMs accept all domestic debit cards and offer the first five or three transactions per month free of cost, depending on the location.
  • Below mentioned are some examples of companies that operate white label ATMs:
  1. Indicash – India’s largest White Label ATM network responsible for ‘uberisation of ATMs.’
  2. India1 Payments (BTI Payments Pvt. Ltd.)
  3. Hitachi Payment Services Pvt. Ltd.
  4. Tata Communications Payment Solutions Ltd.
  5. Vakrangee Limited

Benefits of White Label ATMs

There are many benefits of White Label ATMs:

  • Customers benefit from White Label ATMs since they eliminate the need to visit a bank branch on a regular basis
  • ATMs are available 24 hours a day, seven days a week, including holidays
  • Banks benefit from this because they do not have to maintain a huge staff/office (compared to a system without ATMs). It lowers their branch-operational costs
  • Financial inclusion of rural, semi-urban, and low-income people
  • It allowed ATM cards to be issued by any bank that can be used at White Label ATMs
  • WLA atm also provides mobile recharge, energy bill payments, and other value-added services

Limitations of White Label ATMs

There are also a few limitations of White Label ATMs:

  • The issue of unsuccessful transactions is a key source of concern. In the event of a dispute, the dispute resolution method will include three entities, namely the WLA operator, the WLA operator’s sponsor bank, and the customer’s bank.
  • Customers will be discouraged by the cost issue, as they will be obliged to pay a price to use the White Label ATMs, as only a limited number of free transactions are permitted on the WLAs
  • White label ATMs’ financial viability is questioned because of their low interchange charge and hefty operational expenses
  • If there is a bank-managed ATM in the same area as a WLA ATM, the White Label ATMs may not be able to generate a profit

Differences Between Brown Label and White Label ATMs

The differences between Brown Label ATM and White Label ATMs are:

Brown Label ATM White Label ATM
Brown Label ATMs have their hardware and ATM machine leased by a service provider Non-banking entities own and operate ATMs
The sponsor bank’s brand name appears on the Brown label ATM There is no bank logo on a white label ATM machine
The RBI is not directly involved. These outsourcing firms are bound by contracts with their respective banks The RBI is directly involved as white label companies must obtain a license or permission from the RBI in order to conduct business


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