ATMs become money spinners
Tata Group company has over 1,000 ATMs in AP and Telangana
Hyderabad: With the costs of operating an ATM skyrocketing, white label ATM operators have found a novel way to reduce their costs without burdening the users: Renting out ATM space for advertisements.
“Third-party advertising (TPA), wherein the ATM kiosk is rented out for advertising, is slowly picking up in the country and could help make ATMs financially sustainable,” said Sanjeev Patel, the chief executive officer of Tata Communications Payment Solutions Ltd (TPSCL).
Operating an ATM has become unviable for most banks because of the requirement to provide 24x7 security to ward off possible threat to users. In an attempt to address the rising operational costs, RBI has last year allowed banks to reduce free withdrawals. Renting out ATM space for advertisement could be a better way to lessen the cost burden of users.
“It’s (advertisement revenue) a good business proposition as currently 10 per cent of revenue of our White Label ATMs come from advertising. However, it’s a new medium and will take time to establish itself,” sources said in the company.
Banks, however, are not very enthusiastic about raising revenue through third party advertisements. “It’s the question of brand value. So banks generally don’t rent out ATM spaces for advertising,” said an official of HDFC Bank.
Some major banks like ICICI Bank, however, are setting up ATMs in existing commercial establishments to save on costs incurred on security and space. TPSCL operates white label WLAs under the brand Indicash, which has over has over 6,000 ATMs across India.
The Tata Group company has over 1,000 ATMs in Andhra Pradesh and Telangana and plans to touch 1,500 WLAs by the end of this fiscal. A white label ATM is operated by a non-bank entity and customers from any bank may withdraw money from these, for a fee.
In 2013, the Reserve bank had given licences for setting up White Label ATMs to entities including TCPSL, Seri Infrastructure Finance limited and Prizm Payment Services.
Third-party advertising involves physical branding which includes glass facia, ATM wrap, posters, floor stickers, co-branded signage. It also uses digital branding — lead generation, offers, call to action.