How do private ATMs like "India 1 ATM" make profit?

ATMs such as India1 are known as white label Atms. They are set up by non banking
entities under an RBI license with an objective to drive ATM penetration in rural
areas. In 2013 RBI gave 10 licenses to companies such as BTI Payment, Tata
Payments, Muthoot etc. These are not set up for any one bank. But these ATMs are
connected to all banks through NPCI which means the customers of any bank can use
these ATMs. These companies set up and run the ATMs independent of any bank. They
not only own the entire infra but also own the cash that goes into ATMs. They get
paid an interchange fixed by NPCI. Current interchange they receive is Rs.15 for a
cash transaction and Rs.5 for a non cash transaction. The interchange is the actual
revenue of these companies and is paid by the bank of the customer who uses the
same. This interchange is the same as interbank interchange. These companies are
regulated by RBI and follow stringent security norms specified by RBI.

In most developed countries the last 50% of the ATMs are set up by private non
banking entities. One can argue that the core business of a bank is to acquire
customers, borrow money and lend money. From that perspective it makes sense for
banks to focus on core ops and leave ATM ops to white label ATMs. The concept is
the B-C version of a telecom tower co.

They are outsourced agents/representatives for maintenance of automated teller

machine.

When a commercial bank owns automated teller machine the following are the
requirements:

Payment of rental advance for housing the machine

Cost of automated teller machine
Payment of electricity charges
Payment towards internet charges
Payment towards security maintenance charges
Payment for house keeping charges
The above relates to physical maintenance

The following are other expenses/requirements

Filling of cash as and when required

Transportation charges
Loading of transactions slips
Software maintenance and updation
When the services are outsourced by the commercial banks to the private agency by
means of an agreement, the commercial banks need not take care of the above and by
this manpower and time is saved.

Commercial banks provide limited access to the software in respect of accounts

maintained by them to the switch room. The outsourced agents cannot have an access
to the accounting software and they cannot enter into the system.

Service charges are paid to the agency depending upon the usage of cards and the
service charges depend upon the nature of card use

Pin change
Mini statement
Balance verification
Cash withdrawal
Transfer of funds
Mobile recharge etc.
The details about the service charges payable by the commercial banks will be
available in the agreement to be signed by the commercial banks and the agency.

As and when bills are raised by the agency, the commercial banks settle the bills,.

This is like permitting buses in the bus station maintained by the corporation and
corporation collecting some rent for housing the buses in platforms

How do private ATMs like "India 1 ATM" make profit?

The above question is already answered.

The ATM scenario in India is emerging as a business opportunity for entrepreneurs.

The banks are finding it as a cost to manage ATMs and are slowly outsourcing the
ATMs to a vendor, who would manage the ATMs and the network.

A simple anomaly would be fuel pump operator. He gets fuel from the company like HP
or BP and sell the fuel at the price set by the company. His earnings would be on
the volume of the fuel he sells, taking out the costs of running the pump.

Similarly an, ATM operator would be making money on the number of people visiting
the ATM and the various services the ATM offers. His earnings would be, less the
cost incurred in running the ATM and maintaining the ATM and its premises.

Thanks,

AGS Transact Technologies Ltd,

BTI Payments Pvt Ltd,
Hitachi Payment Services Pvt Ltd,
Muthoot Finance Ltd,
RiddiSiddhi Bullions Ltd,
SREI Infrastructure Finance Ltd,
Tata Communications Payment Solutions Ltd,
Vakrangee Ltd.