Sequoia Capital-backed payment solutions firm Prizm Payments is planning to set up 10,000-15,000 white label ATMs (WLAs) in two years after its official foray into the business in the next financial year.
White Label ATMs are automated teller machines set up by non-bank entities and which can be used by customers of all banks.
Prizm Payments managing director Loney Antony told VCCircle the company expects the new business to contribute around 15-20 per cent to its overall business in three-four years of the launch.
"WLA has been there in our long-term plan," Antony said, adding that he doesn't expect huge revenues in the first couple of years. "However, I am extremely bullish that in 3-4 years' time, it will generate significant revenues complementing our existing business."
In July this year, the Reserve Bank of India (RBI) revisited existing ATM policy, paving way for non-banking entities to foray into WLA business. The guidelines stipulate that the authorisation for setting up a WLA operation would be initially valid for a period of one year and the scheme and number of WLAs sought to be installed would need to be indicated at the time of application. "So, the number of cash machine that we are going to install is dependent on RBI approval," Antony said.
It requires around Rs 500,000-700,000 to install a machine and Prizm has already deployed WLAs in a few Future Group shops on a pilot basis. "These cash boxes don't display the logo of any specific bank and can display advertisements. A bank customer will be able to withdraw money from these kiosks by paying a certain fee. Similar to traditional ATMs, WLAs provide banking services to customers of various banks, based on the cards (debit, credit or prepaid) they hold," Antony said.
A WLA will not replace a bank-branded ATM, but it will complement that facility, he said. "Unlike the banks which outsource ATM deployment to ATM network operators, the WLA provider can choose the places to deploy the machines and can tie up with retailers or small groups of people to set up WLAs in their shops or other convenient places. We will share revenues based on the number of transactions."
The company is planning to tie up with three banks to facilitate the WLAs. "Currently, we are piggybacking on banks and set up the facility when a merchant banker wants to get an ATM installed in a chosen location."
This concept has been a huge hit in developed economies like the US. Retailers there attract customers by setting up WLAs at their shops so that they can withdraw money and make other value-added transactions. In those markets, WLAs are neck and neck with bank-branded ATMs. So over a period of time, this model can be replicated in India, too.
According to Antony, the new policy change it is perfectly timed as any bank in India is closely associated with the growth of the organised retail sector. "Besides, the country has opened its market to foreign retailers. And that bodes well for a company like Prizm as we hope more and more firms will be looking to innovate their business strategies by installing cash machines to draw more consumers to their shops."
(Edited by Prem Udayabhanu)