ATM sales on the downswing

THE ECONOMIC TIMES (30-10-2006)

India saw the number of ATMs grow to over 17,000 machines in 2005 from 1,500 ATMs in just five years. In the last one year, however, ATM sales in the country were down to about 2,000 pieces. Not because ATM market has saturated in the country, but because of regulations , industry players said.

ATM sellers thought booming economy, increasing card usage, rising customer expectations and cost savings for banks would keep the ATM growth going. For example , Venture Infotek in a survey on payment card industry said in 2005, "Five years from now bankers reckon that there will be roughly three ATMs for every one branch, which may result into around 70,000 bank branches and over 2,00,000 ATMs by 2010."

However, some doubt if ATMs would reach its potential with the current restrictions by India's central bank.

Mr Harish K Murthi, CMD, CashLink Global Systems, which markets ATMs, said.

"Some years ago, China was not far ahead of India in terms of the number of ATMs. Today, China has 1,20,000 machines, and India just a sixth of that. You would expect India to have atleast half the number of China's ATMs. But ATM sales have actually slowed down now," he said.

The total sales, all players put together, would be about 2,000 machines this year, he said. Compare this to the growth between 2003 and 2005. The number of ATMs grew from 7,851 in 2003 to 11,334 in 2004 and to 16,075 in 2005, growth of about 3,500 and 4,700 respectively.

In September last year, RBI stipulated that banks would have to take prior permission to set up offsite ATMs.

Another regulation that stand in the way of ATM sales in India is that RBI is against third-party ATMs (or Independent Sales Organisations ) to set up white label ATMs. In US, ATM growth especially after 2001, was primarily driven by ISOs.

DOWN SLIDE

RBI has stipulated that banks should seek permission before setting up ATMs

Regulator is against independent sales organisations setting up white label ATMs