Business Scope of White Label ATMs in Pakistan

Webdnaworks

Webdnaworks (Pvt) Ltd.

Webdnaworks (Pvt) Ltd.

PSO/PSP License Member

Webdnaworks

CORPORATE OFFICE
10th Floor, UBL Tower, Blue Area
Islamabad, Pakistan

Email: info@webdnaworks.com
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Executive Summary

Webdnaworks Private Limited (“WPL” or “the Company”), is a PSO/PSP (Payment System

Operator / Payment Services Provider) licensed company regulated by the State Bank of Pakistan.
Under this license, WPL has installed Pakistan's first-ever White Label ATMs (WLAs) with the brand
name CASH1 and is underway to install these WLAs across the country.

The company incorporated in 2003, is a pioneer of the Independent ATM Deployment (“IAD”)
Model in Pakistan and is currently the sole operator of this model in the country. Webdnaworks
(Pvt) Ltd “WPL” provides an end-to-end ATM outsourced solution to banks and other financial
institutions. The process incorporates different services which include investment in the
procurement of ATMs, acquisition of commercially viable locations, installation of ATM(s), ATM
Monitoring, ATM maintenance (for Off-site ATMs).
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Webdnaworks Achievements
PSO/ PSP License
WPL has been awarded the PSO/PSP License by the State Bank of Pakistan for WHITE Label ATMs
Deployment as an Independent ATM Deployer. This License is key evidence of Webdnaworks (Pvt)
capabilities in ATM Deployment and Management.

1LINK Membership

WPL is the first non-banking member of 1LINK Pakistan Limited (National Gateway) and is successfully
integrated with 1LINK for the White Label ATMs project.

ATM SWITCH

WPL has deployed its own ATM Controller for its WHITE LABEL ATMs Brand CASH1.

WHITE LABEL ATMs

 WPL is aiming to install Independent WHITE LABEL ATMs across the country;
 WLAs will be equipped to process all types of debit/credit cards.
 To enhance the outreach, WPL intends to rollout the WLA network in Tier 1, Tier 2, and Tier 3
cities.
 The services would range from Cash Withdrawal Facilities, Transfer of Funds, Mini Statements to
Balance Enquiry and Utility Bills Payment, Mobile top-ups, and many more add-on's.
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Operational Structure

Complete Infrastructure for Independent ATMs Management

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An Introduction to White Label ATMs

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White Label ATM

White Label ATM (WLA) business model is a proven ATM deployment model across the globe. The
ATMs or Cash dispensing machines in this model are owned and operated by Non-Banking
Financial Corporations, the operator of this model are termed as White Label ATM Operators
(WLAO). These WLAs provide banking services to the customers and clients of banks as a
facilitator. To begin operations of White Label ATMs in Pakistan it is mandatory to seek a PSO/PSP
license from the State Bank of Pakistan.

Positioning Strengths

 A well-established business model in developed countries replicated in Pakistan

 Experienced sponsors with a proven track record
 Robust & developing sector business model with strong regulatory support & investment
oversight.
 Attractive Returns with further upside potential

Industry Gap

 Card Base of 44.5* Million+

 Only 16,175* ATMs in Pakistan
 Majority of ATMs (13,294*) installed in branches
 Only 2,869* ATMs to facilitate remote locations (mostly in cities)

Purpose of White Label ATM Operator

To complement the SBP vision 2020 – financial inclusion, digitalization of payment processing in
Pakistan and hence being a White Label ATM Operator contribute to the enlargement of ATM
footprints in Pakistan.

Webdnaworks is a State Bank of Pakistan’s regulated and licensed Payment System Operator and
Payment Service Processor (PSO/PSP). We are here to fill the huge gap between the ATMs installed
and the plastic money circulated by banks in Pakistan, as per the directive of the regulator.

*As per the State Bank of Pakistan’ Payment System Quarterly Report: January – March 2021 (Quarter-3,
FY21)
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Pakistan ATMs Infrastructure

Overview
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Banking Industry Overview

 There are currently 33 Commercial Banks and 11 Microfinance Banks (MFBs) in Pakistan.
 The total number of bank branches are 16.223
 The number of Banks’ Accounts are 62 Million
 There are 44.5 Million payment cards in Pakistan
 Number of banks having ATMs 35
 There are currently 16,175 ATMs installed collectively by all banks and MFBs
o Onsite 13,294
o Offsite 2,869
o Mobile 12

e-banking
In Pakistan, e-Banking, transactions include payment transactions processed through channels
like Real-Time Online Branches (RTOBs), Automated Teller Machines (ATMs), Point of Sales (POS),
Internet Banking, Mobile Phone Banking, Call Centers/IVR Banking, and e-Commerce.

As per the State Bank of Pakistan (SBP) Payment Systems Review for Quarter 3 – FY21 (January –
March 2021), the overall use of e-Banking channels has seen an increase of 4% in volume and 5%
in value over the previous quarter.

Transaction share of ATMs share in e-banking

As per the State Bank of Pakistan (SBP) Payment Systems Review for Quarter 3 – FY21 (January –
March 2021). e-Banking channels i.e. RTOBs, ATM, POS, e-Commerce, Banking through Mobile
Phone, and Internet and Call Centers altogether processed 309.5 million transactions of value
Rs.22.5 trillion. ATMs processed the majority chunk with 49% transactions.
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Pakistan ATM Industry Gap and

Opportunity for WLAO
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Demand / Supply Gap

 Pakistan is a cash-based society with ATM penetration coverage per 100000 population is
among the lowest in Pakistan and the card base (card issuance) is continuously getting
improved.

 Most of the ATMs are onsite and are located in clusters in the business and/or commercial
hub of each city, leaving a huge gap in servicing customer cash needs in their nearby
service/community areas. Thus reach to ATMs by potential users is a challenge especially
in Tier 2 and 3 cities and thus WLAs are required to address this gap by reaching customers
as near as possible.

 Customers have to travel a distance to reach the nearest ATM for withdrawing cash.

The solution to meet the ATM Availability Gap

Despite the SBP initiative of 1:1 (banks are required to deploy at least one ATM against each
branch) still, the number of ATMs installed is less than the number of bank branches. As the banks
take deposits, therefore they are bound to charge a minimum transaction fee from the customers
(no charges of cash withdrawal for on-us transactions and only Rs. 18.75 for the off-us transaction)
hence making ATM deployment a cost center for them, therefore banks are not keen to install any
additional ATMs especially off-site ATMs.

Whereas in the case of WLAO as a banking customers facilitator, WLAO is allowed by the SBP to
charge a handsome per ATM transaction fee from the ATM users, making WLA a feasible business
case for WLAO to increase its footprint.

Opportunity for Webdnaworks as WLAO

 Our extensive experience of site acquiring has enabled us to sight the cash-intensive
locality where there is no other ATM present for the cash payout.

 To facilitate customers for cashing services we will reach them by installing ATMs at their
housing society, housing apartments, supermarkets, small and medium-sized commercial
centers, bus terminals, and shopping areas/malls/plazas, etc.

 Pakistan is a cash-based society and the pace of technology adaptability is quite slow, ATM
being an older market player carries a healthy user proportion and confidence than any
other means.

 Cards issuance base is increasing day by day and hence demand is further widening the
ATMs gap.
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 Most of the daily business transactions are still in cash. During the current quarter, ATMs
collectively processed 153.5 million* transactions valuing Rs. 2084.5 billion*. Despite the
availability of other banking facilities, still ATMs are mostly used for cash withdrawals.
Moreover, the Currency in Circulation is recorded at PKR 6,861,792 million*

 ATMs still are mostly used for cash withdrawals in the country. In total, cash withdrawals
through ATMs have the highest share of 96% by volume.

Market Size

 *There are only 16,175 ATMs in Pakistan to facilitate 44.5 million plastic cards and most
of the ATMs are in clusters. So this makes a decent ground to install White Label ATMs.
 *Payment cards stand at 44.5 Million, of which the major portion is of Debit / ATM cards
(78.7%) and it is increasing month on month basis.
 *Banks on the other side are not willing to install ATMs. The number of ATMs (16,175) to
no of branches (16,223) is evident to it.

Competition

 We are currently the only licensed PSO/PSP in Pakistan allowed to install White Label
ATMs.
 Agent lead model by telecoms – wide network but expensive for customers and also
lacks/exposed to compliance and risk factors.
 Users having confidence in ATM transactions are far more in numbers than web or app-
based transactions:
o Quarterly ATM transactions: 153.5* million.
o Quarterly consolidated transactions of Internet Banking, Mobile Phone Banking,
Call Centers/ IVR Banking, E-Commerce: 156* million.

Revenue Model
Service fee per transaction which varies based on transaction nature but major revenue driver is
a fee on Cash Withdrawal Transactions

Pricing

 We are mandated to decide our pricing based on our business viability model but should
be transparent to the customer before processing the transaction so that he may have
the option to proceed ahead for the transaction or reject the transaction.
 The schedule of charges needs to be reported to SBP periodically.
 As per our current schedule of charges, we are charging only PKR 50/- flat per transaction
(compared to banks’ charges of PKR 18.75/- per transaction)

*As per the State Bank of Pakistan’ Payment System Quarterly Report: January – March 2021 (Quarter-3,
FY21)
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Additional benefits of PSO/PSP

Lisence
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White Label POS

Webdnaworks has successfully managed to create an ecosystem that required not only to run
Pakistan’s first-ever White Label ATM Network which also allows us to enter into the POS business.
WPL is interested in acquiring the existing POS Network (there are only 67,099 POS installed in
Pakistan) as well as enrolling new merchants for the deployment of Pakistan's first-ever White
Label POS.

Our Strengths for Establishing White Label POS Network

 WPL is a PSO/PSP license holder.

 Being a licensed payment service provider WPL is familiar with the payment systems
industry in Pakistan.
 WPL already is a member of 1LINK Pakistan and our middleware is integrated with 1LINK.
 WPL has its settlement account with SBP.
 WPL is already managing switching operations for its WLA network.
 WPL has a dedicated team of site acquiring specialists, hence we are the best contender
for the rolling out of the POS network at a steady pace.
 WPL already has a functional department for claim settlement and dispute resolution.
 WPL has its department for 24 x 7 helpline management.
 WPL has its technical resources deployed across Pakistan.

e-payment services

 WPL is aiming to provide e-payment services to the e-commerce industry in Pakistan. The
payment gateway shall have its E-Commerce transaction processing, routing, clearing, and
settlement like Cybersource.
 No dependency on VISA or MasterCard payment gateways. All the transactions shall be
routed and settled through its network.
 Convenient and secure payment options shall be introduced to the customers for domestic
online payments like VISA, MasterCard, COD, and EasyPay, etc.
 WPL’s payment gateway solution shall provide a cost-effective and secure channel to banks
and merchants for eCommerce transactions.
 Merchants can be brought on the platform by offering low MDR (Merchant Discount Rate).