But what you have is poor footfaH at WLATMs and high operating costs; the cap on free transactions has added to the woes. And the din for a higher inter-change fee is reflective ofall this. Net effect: ATM deployment has gone down contrary to forecasts ofa fillip with the entry ofWLATMs. To put it bluntly, WLATMs may soon turn out to be white elephants.

So when Patel says “the bulk ofour ATMs are in low-tier towns to drive financial inclusion”, it stumps rivals (seeA Tellers’ Tale) who struggle to put up runs on board; and worse, don’t want to go out and bat at all. “I see no reason to deploy so many WLATMs. It makes no sense,” says K.R. Bijumon, chief general manager ofMuthoot Finance, which has put up just 200 WLATMs. I ast May, he had told BIT) ‘We have been abit slow off the blocks, but the rollout will gather pace in the months ahead. At 100 ATMs a month, we will reach 1,000 by March 2015.” He’s offthe target by 80 per cent!

Echoing Bijumon’s thoughts, Loney Antony, managing director at Prizm Payment Services, says: “Ifl don’t earn money, what can I do?” Antonyis candid thatlosses continue to mount on account of WLATMs. So he has pulled out nearly200; it now stands at 1,200ATMs thereabouts. Financials are hard to get as these entities are privately held. Nowyou may quibble it’s a case of sour grapes for Bijumon and Antony—the truth is the tellers’ tale hangs in balance.


Indicash added more ATMs in FY15 than the top four banks put together

Indicash SBI Group ICICI Bank HDFCBank Axis Bank


Beyond Numbers, Betwixt Lines…

At theheartofthe mess is the inter-change fee -(down from Rs 18). It’s WLATMs only way to earn bread and butter; their bellies fill up only when more and more plastic is swiped on their networks. For issuers, it’s an expense they have to bear on behalf of customers. It’s a different matter that after three free transactions in a metro (it’s five in the non-metros), the plastic-issuer charges you anything between Rs 20 and Rs 30 and to that extent, covers up for the inter-change pay out


What’s important here is that it holds good onlyforyour bank that pockets this fee; not for WLTAMs that issue no plastic.

Not many swipe cards at WLATMs. If 100 people queue up at abank’s proprietary or brown-label ATM, only 40 go to WLATMs. “It’s very hard to get folks in the low-tier towns to go to WLATMs as they associate banks with ATMs,” says Suneel Aiyer, chief executive at Writer’s Safegaurd, a cash-management firm that loads currency in ATMs and is also into brown- label ATMs. And you have empirical evidence to prove this lack of traffic at WLATMs from the way brown-label ATM deployers bid for the rate per transaction (RPT)—the fee they get for every swipe —to be charged to banks for a tender of63,000ATMs floated by North Block in 2012.

AGS Transact Technologies’ RPT bid was Rs 12.10. We don’t knowhow Prizm, FIS, Mphasis, Electronic Payment Systems and TCPSL bid, but it’s been gathered that one brown-label

contender’s bid was as low as Rs 7 and that the bid-range by this lot was between Rs 7 and Rs 12.10. Nowifinter-change fee at Rs 15 is asore point for WLATMs, how come some in their brown-label avatars bid low on the RPT (technically it’s not inter-change, but that’s what you earn at the end ofthe day)?

Explains Bijumon at Muthoot (not abrown-label entity though): “That business model is different People come into brown-label ATMs as the signage is that ofbanks; they are deemed as banks’ outlets. Typically, 60 per cent of all swipes are at banks’ own ATMs; the rest is at ATMs ofother deployers. Again, you get to earn an RPT on 100 per cent of the transactions. You can’t extrapolate RPT bids into WLATMs and say we are now being unfair to clamour for a higher inter­change”. There’s another matter of detail: the inter-change for WLTAMs is not Rs 15 — it’s Rs 13 as Rs 2 goes to the sponsor bank. That’s because only banks can be part ofthe Mint Road settlement system.

Also note howthe lower traffic at WLATMs that Aiyer alludes to and the high number of swipes at banks’ proprietary or brown-label ATMs that Bijumon refers to mirror each other. You now have a ridiculous situation: banks now
monitor ATMs, other than their own, with higher traction andthenplonktheir own ATMs next to them to save on the inter-change payout This has led to a slug-fest between banks and WLTAMs, when ideally, they should have played complementary roles. Oh and by the way, North Block’s brown-label tender of 2012 for 63,000ATMs has seen only a 50 per cent strike rate despite an RPT on 100 per cent ofthe transactions; and some mandate winners, sources say, have opted to pay a penalty rather than deploy ATMs.

Antony feels what has clouded the view (for WLATMs) is “this business of three free ATM transactions in the metros and five in non-metros, which has added to the confusion.

It’s very hard to say if you are in a metro or a non-metro as some places are on the borderline.” Besides, free swipes now cover not just cash withdrawals but balance-enquiries and mini-statements too. Adds Bijumon: “Some banks have put a limit on free transactions on their own machines as well. It has confounded the problem. It is hard to remember where you swiped and what for.”

Brace For An Even Bigger Jam

It’s no surprise that ATM deployment numbers have fallen. The installed ATM base at1,93,000 is lower than London- based Retail Banking Research’s (RBR) projection of2,25,000 for 2014 up to 2017- RBR—a strategic research and consulting firm in retail banking, automation and payment systems — reports are the gold standard in this line of business.

“I have never seen RBR’s numbers like this. It’s unlikely that deployment forecasts at2,80,000 ATMs (2015), 3,40,000 (2016) and4,00,000 (2017) will be met,” notes Antony. The latest RBR (2014 up to 2019) forecast paints a gloomy picture: ATMs will be at2,90,000 in 2016,3,40,000 (in 2017), 3,90,000 (in 2018) and4,40,000 (in 2019) — that is, we may cross4,00,000two years later than what was forecast in 2013.

It’s not good enough to just open millions ofbank accounts underthe Pradhan Mantri Jan Dhan Yojana (PMJDY) or gloat that the numbers have made it to the Guinness Book ofWorld Records — it only makes for agood start. To be truly effective, growth in the card-acceptance infrastructure has to be in line with the spurt in accounts.

And here’s the irony: at the other end, you have 575million pieces of plastic (553 million debit cards and 21 million credit cards); it’s been a northward soj oum all through the years. Most ofthe bank accounts opened under PMJDY (all issued with a debit-card, which is nothing but a deposit-access facility)