ATM – White Label & Brown Label ATMs

Automated Teller Machine (ATM) is a computerized machine that extends transaction facility to the customers of banks, without visiting branches. Customers can access their account, withdraw cash and carry out a number of other transactions by visiting an ATM centre. Automated Teller Machine was the first step towards digital banking. It was one of the first alternate channels provided by banks for transactions on 24 x 7 basis.  Today, a number of financial and non-financial transactions can be carried out through ATMs.

ATMs maintained by banks can be broadly classified under two categories.

Onsite ATM – These ATMs are housed in the branch premises of the bank branch. Generally, the connected branch itself manages the cash in these ATMs.

OffsiteE ATM – Offsite ATMs are housed at a location away from the branch premises. They are generally setup at good locations with scope for lot of transactions. These centres  permit customers of  any bank living in this area to carry out essential banking requirements through the machine, without visiting their respective and  far away branches. The machines are connected to the banking network and transactions get reflected in bank records on real time basis. 

As the number of ATMs increased, managing the ATMs became a headache for branches. As a result, two models, White Label ATMs (WLAs) and  Brown Label ATMs (BLA) emerged.

White Label ATMs (WLAs)

During the initial phases, ATMs were owned and maintained by banks. As the ATM network  expanded , maintaining the ATMs became a herculean task for banks.  White Label ATM (WLA) emerged as a solution for banks. In WLA model,  ATMs are set up, owned and operated by non-banks.  These ATM network operators are required to obtain approval from the Reserve Bank of India (RBI) under  the Payment & Settlement Systems Act, 2007. The idea of White Label ATMs was muted to ensure expansion of ATM network in rural areas for better financial inclusion and increase geographical spread of banking and ATM services.

As far as a customer is concerned, using a WLA is similar to using an ATM of any other bank (bank other than card issuing bank / bank with which account is maintained). However, WLAs are not permitted to offer all the services offered by banks through ATMs.
The rationale of allowing non-bank entities to set up White Label ATMs has been to increase the geographical spread of ATMs for increased / enhanced customer service, especially in rural areas.

Brown Label ATMs (BLA)

Brown Label ATM is a recent concept. In this set up, service providers own the hardware of ATM machine. Identification of ATM site, execution of lease agreement with landlord, arranging power supply and maintaining the centre are taken care by the service provider.  Arranging cash for replenishment in the ATM, providing ATM connectivity and reconciliation are the duties of sponsor bank.  The service provider  carry out their duties for a charge. Often, the charge is linked to the volume of transactions carried out through such ATMs.  The Brown Label ATM centres carry the logo of sponsor banks. This network, free banks from the headache of maintenance of ATM centres by themselves.

On-Us and Off-Us transaction

A transaction carried out by an ATM card holder in the ATM maintained by the card issuing bank is called as On-Us transaction.  If an ATM card holder carries out a  transaction at an ATM of the bank which is different from the card issuing bank , it is mentioned as Off-Us transaction.  Transaction at a WLA is also an Off-Us transaction.  For instance, if a card issued by bank X is used at an ATM of bank X then it is an On-Us transaction. If the card issued by bank X is used at a WLA or at an ATM of any bank other bank X, it is an Off-Us transaction.

Precautions to be taken in respect of expired card and card lost/ stolen

Normally, banks send new card to their customers before expiry of the old card and request the card holder to destroy the old card.  A card upon expiry of its validity should be cut into four pieces through the magnetic strip / chip before disposing it off. On closure of operating accounts, banks demand the customer to surrender the ATM card issued in the underlying account.

If a card is lost/ stolen, the customer should contact the card issuing bank immediately on noticing the loss / theft of the card and should request the bank to block the card. As per the Limited Liability norms stipulated by RBI, customers can minimize their losses immediately on report of loss to the Bank. The customer is liable only for a portion of such loss, depending the amount of loss and date of report.  They are protected from the losses happening after report of loss of card.