Despite growth of e-transactions, ATMs see surge in orders, deployment

Business Standard

25-04-2025

The automated teller machine (ATM) business in India looks to be picking up pace despite dire warnings about the demise of cash in a world that is increasingly driven by digital transactions. The ubiquitousness of unified payment interface (UPI) for amounts as small as Rs 10 has created a general perception that cash is now a burden rather than a convenience.
But the numbers seem to tell a different story.
Since post-demonetisation, in 2016, the number of ATMs in use has jumped from 225,000 to 2,60,00 units, a growth of 35,000 in nine years. Additionally, between September 2023 and March 2024, requests for proposal (RFP) for the ATM channel has topped 44,500 (more than the 40,000 ATMs added post-demonetisation). SBI had floated an RFP for purchasing 16,000 ATMs and cash recyclers (units in which you can withdraw and deposit cash), and outsourcing of 17,500 units in that period. Outsourcing orders were also placed by Bank of Baroda (7,500) and Punjab National Bank (3,500). Deployment of white label ATMs (WLATM) - which are set up, owned, and managed by companies other than banks – too has increased. Both India1 Payments and Hitachi Payments' ATM bases have crossed 10,000.
Meanwhile, Australian fintech firm Findi has placed an order for 7,000 automated teller machines (ATMs) in a clear indication that cash is still very much in vogue, if not king.
Deepak Verma, managing director and chief executive officer, told Business Standard that the company plans to roll out installations over the next year. Its brown-label deployment contracts include those for the State Bank of India, Union Bank of India and Central Bank of India. Findi had in February this year acquired Tata Communications' WLATMs, numbering 4,600-plus units, through its arm Transaction Solutions International (India).
Industry sources said that the hike in the interchange fee for ATM cash withdrawals to Rs 19 from Rs 17 will aid more deployments. According to Vishal Maru, global processing head, Financial Software and Systems, this increase will help banks and service providers alike to offset escalating costs of maintaining and securing ATM networks. Besides, it presents an opportunity to reinvest in infrastructure, making ATMs more reliable and efficient.
There has also been a shift towards cash recyclers – machines in which you can both deposit and withdraw cash; the share of recyclers is at nearly 95 per cent of the annual replacement orders for ATMs despite the fact they cost around Rs 5.50 lakh per unit compared to Rs 3 lakh for legacy machines that only allow withdrawals. Of the 260,000 currently-deployed ATMs, about 40,000 are recyclers. The trend towards higher recyclers picked up pace around three years ago with nearly 95 per cent of the replacement orders for ATMs being for such units, since they ease pressure on bank branch staff. It has set the stage for ATMs to morph into a 'virtual branch network', and emerge as a remittances channel in its own right.
The report of the 'Committee to review ATM interchange fee structure' headed by the Indian Banks' Association's then chief executive officer V G Kannan in 2019 said in its executive summary that 'the ease and ability of withdrawing cash from bank accounts at the time and place of choice/requirement gives confidence to the customer to keep money in the bank accounts thus increasing the money in circulation through formal banking channels'.
Still in demand
· Findi in February acquired Tata Communications' white-label ATM (WLATMs) numbering 4,600-plus units through its arm Transaction Solutions International (India).
· Between September 2023 and March 2024, request for proposal (RFP) for the ATM channel had topped 44,500. This is more than the 40,000 ATMs added post-demonitisation
· There has been a shift towards cash recyclers – machines in which you can deposit and withdraw cash; the share of recyclers is at nearly 95 per cent of the annual replacement orders of ATMs.
· This is despite the fact they cost around Rs 5.50 lakh per unit compared to Rs 3 lakh for legacy machines.