With less than a quarter of the 2.3 lakh ATMs deployed in rural areas in the country, account holders are growing increasingly comfortable withdrawing cash from neighbourhood bank agents and merchant shops which double down as ‘micro-ATM’ points.
In November, 68.4 million withdrawals worth Rs 18,820 crore were processed through AePS channels against 39 million worth Rs 9,778 crore in the same period last year, latest Reserve Bank of India (RBI) data showed.
At the same time, ATM transactions fell to 340 million worth Rs 1.43 lakh crore in November, against 640 million withdrawals worth Rs 3.04 lakh crore, the data showed.
Industry experts told ET that the convenience of setting up these micro ATMs against cost-intensive ATMs could see the model replace teller machines in rural regions over the next few years.
“The rural population has caught on to the idea of using nearest payments and transactions services, we have ramped up our AePS and micro-ATM network significantly after the pandemic,” said Rishi Gupta, MD, Fino Payments Bank.
“The use case is also higher now; people can access these services at any merchant outlets which are open during the day rather than visiting a bank branch or an ATM,” Gupta added.
Given the minimal ATM penetration in the interiors, banks and payment companies have doubled down on their micro-ATM reach to attract customers seeking DBT payouts and local access to payment services.
According to Anand Bajaj, the CEO of PayNearby, one of the leading facilitators of AePS transactions in the country, there is an urgent need to build cost-effective digital infrastructure to provide basic accessibility for rural customers.
“With ATMs becoming unviable to run, especially in rural regions where even otherwise there was limited penetration, there is an urgent need for cost-effective digital architecture to provide accessibility to financial services,” said Bajaj.
“However, beyond card transactions, there is a need to graduate our ecosystem to a form-factor agnostic payment and banking solution,” he added.
Payment banks including Fino and India Post are leading the charge to onboard merchants and banking correspondents through deployment of authentication devices.
Fino Payments Bank, for example, onboarded nearly 1 lakh merchant points between April and November. The bank also deployed 70000 micro-ATMs during the same period. Its combined transaction volume for Aadhar enabled Payments and those on micro-ATMs rose 60% in the past eight months, claims Gupta.
Likewise, fintech player RapiPay added 60,000 new micro-ATMs since April and is onboarding 25,000 merchants every month, taking its total strength to 150,000 merchants. The company has also registered a growth of 120% in AePS over last year and more than doubled their micro-ATM transactions.
“Micro-ATMs have turned out an instrumental service in a cash high economy like India and its need has been felt increasingly in the pandemic when this channel alone processed Rs 1.75 lakh crore withdrawals for the government direct benefit transfer scheme,” said Yogendra Kashyap, MD, RapiPay.