Indian digital payments industry is growing at a higher growth from 2016. The government of India and the Reserve bank of India have taken up a couple of initiatives to push the demand for digital payments, including Demonetization, reducing cash withdrawal limit at ATMs, permitting payment bank operations, and launching government-backed digital payment mobile apps, among others. Business opportunity in Indian ATM operations ATM: There are over 2.2 lakh ATMs in India and above one lakh ATMs are located at on-site, which means they are deployed where the banks are located; and over 95,000 ATMs are off-side and close to 15,000 ATMs are white labelled. ATMs play a significant role when it comes to cash management and settlement. The leading 5 banks in India have about xxx ATMs, which is also represented as xx% in total number of ATMs. According to Confederation of ATM Industry (CATMi), over half of ATMs in India are expected to shut by 2019, in the new compliance guidelines that focus on cash operations.

1. Indian digital payments industry is growing at a higher growth from 2016. The government of India
and the Reserve bank of India have taken up a couple of initiatives to push the demand for digital
payments, including Demonetization, reducing cash withdrawal limit at ATMs, permitting payment
bank operations, and launching government-backed digital payment mobile apps, among others.
These two-year-oldinitiativeshave broughtmillionsonIndianconsumersandretailersondigitalcash
settlementplatformsanddigital walletprovidershave witnessedmillionsof active customeraccounts
every day. However, these initiatives are not enough to push a significant percentage of the
populationontodigitalplatforms.Recently,the governmenthaslaunchedUPI2.0andannouncedkey
informationoncashwithdrawal limitatATMs,these initiativesare more likelytodrive the growthfor
digital cash transactions in the country. Also, the period has witnessed Banks and cross-border
financial services companies entering Indian payments and settlements, payment gateways and
mobile walletservicesamongothers.Also,the technologiesincludingArtificial Intelligence,predictive
riskmitigationandBlockchainare expected to push the digital journey of Indian payment systems.
Business opportunity in Indian ATM operations
ATM: There are over 2.2 lakh ATMs in India and above one lakh ATMs are located at on-site, which
meanstheyare deployedwhere the banksare located;and over95,000 ATMs are off-side andclose
to 15,000 ATMs are white labelled. ATMs play a significant role when it comes to cash management
and settlement.The leading5 banks in Indiahave about xxx ATMs, whichis alsorepresentedasxx%
in total numberof ATMs. Accordingto Confederationof ATMIndustry(CATMi),overhalf of ATMs in
Indiaare expectedtoshut by 2019, in the new compliance guidelinesthatfocuson cash operations.
What has changed in ATM operations? ATM service providers are required to upgrade their ATM
hardware and software:
i. minimum net worth of $14 million for ATMoperators and cash-in-transit companies
ii. A requirementforincreasingthe fleetof cashvansbyupto300% andestablishingconnectivity
iii. CCTV connections
iv. introducing lockable cassette swap in ATMs
Since 2012, the revenue generatedbyATMs has not increasedandthe post de-monetizationperiod,
at the same time the operational expendituretorunanATMhasincreased,whichhasresultedinshut
down of over 2,000 ATMs in the country.
Also,the ATM interchange isat INR15 for cash transactionsand INR5 for non-cashtransactionssince
2012.
Cost of ATMs
It costs over INR 5 lakh to INR 7 lakh to set up an ATM, excluding monthlyrenal charges for a place,
electricity, security, and maintenance charges among others.
Andthe ATMs revenue ispaidon per-transactionbasisand each ATMneed a minimum of 100 to150
transactions a day to run profitably. However, since November 2014, the RBI has allowed banks to
charge their customers for making more than five transactions at ATMs.
Due to this,ATMoperatorswill havetospendanadditional amountof upto$489 million,tomeetthe
compliance requirements, which results in investing $2000 - $2500 per ATM in the initial year.
However,mostATMsinthe on-urbanlocationsare expectedtoclose orrelocateasthe cashoperation
cycles are long in these locations. Also, ATM Managed service providers are required to invest an
amount of up to $1,200 towards deploying lockable cassettes in ATMs. Which will be adopted by a
minimumof 30% ATMs everyyeartoachieve 100% deploymentof lockable cassettesby March 2021.

2. In spite of the regulatory challenges and requirement for investments, ATMs are more likely to
relocate theirATMs, or shutdown for a definedperiodof time.Also,the same periodisexpectedto
see the emergence of payment banks as full-fledged digitalized banks.
AGS Transact Technologies,developingUPItechnologyforcashwithdrawalsat ATMs as both UPI 2.0
and the ATM networks run on the same financial switch. UPI 2.0 is expectedto classify recipients
againstmerchantcodes, whichwill alsoenableATM-deployingbankstorecoverthe interchangefee.