Being in the high-cash economy regions, more than a million Indians are scanning their fingerprints or iris and withdrawing cash at local kirana stores every day through biometric-abled payment POS machines from their aadhaar linked bank accounts to fulfil their daily cash needs. These devices are called Micro ATMs.
Micro ATM aims to bridge the growing gap by allowing customers to carry out essential financial transactions by empowering local retailers and kirana store owners with these devices. The AEPS systems empower even the most marginalized and underserved Indians, bringing the convenience of biometric enabled transactions at their doorstep.
The Aadhar-Enabled Payments System (AEPS) has emerged as one of the fastest growing payments systems of the country having annual growth rate of 150% since its launch in 2016. It is second only to Unified Payment Interface (UPI) system in terms of the annual growth rate.
According to the most recent data by National Payments Corporation of India (NPCI), 33.5 million transactions worth Rs 9,000 crore happened over micro ATMs in May 2019. In the initial five months of the 2019, almost 145 million transactions have occurred through micro ATMs as against an overall transaction volume of 200 million in the entire 2018.
While UPI addresses just the top 80 million customers, AEPS caters to 800 million customers who are not reached by banks directly. With expanded driving force by the government on Direct Benefit Transfers (DBT) for delivering the government schemes to the citizens, such access infrastructure can go far in satisfying financial inclusion mandate of the government.
This payment channel developed by NPCI in 2015 works as cash points for rural bank customers where they can withdraw cash from their aadhar linked bank accounts simply by scanning their fingerprint or iris at biometric compatible point of sale (POS) devices, working as a Micro ATM. Additionally, these points with micro ATMs can also function as ‘cash in, cash out’ (CICO) centres where customers can withdraw up to Rs 10,000 using their debit cards or via aadhaar authentication and make deposits.
A recent data by Reserve Bank of India on ATM deployment by banks reveals that only 19% ATMs were deployed in rural geographies. Out of 220,000 ATMs across the country, only 40,000 odd ATMs are in rural areas where 62% of the Indian population resides. Besides the low penetration of ATMs in rural areas, the total number of ATMs is also declining year on year from the past two years. Thus, there is growing demand and higher penetration for micro ATMs to reach the last-mile of the country and addressing the problems faced by the rural population in fulfilling their cash needs, as greater part of these areas are high-cash economy.
In this context, micro ATMs, which are cheap to set up and operate, may go a long way in improving banking access for the underbanked.
How does the Micro ATM works?
Micro ATMs are usually used by business correspondents of banks, who are representatives of banks in rural areas, to provide basic banking services to customers who are far away from bank branches. Even retail shop-keepers can simultaneously work as a business correspondents (BC) and use these terminals for both retail operations and banking operations.
- Firstly, the customer needs to undergo the authentication process. For the same, the customer needs to scan his fingerprint or iris on the biometrics enabled POS machine, which is verified by the UIDAI records.
- On completion of verification, Micro ATM displays all the transaction options that can be performed by the user.
- The customer then needs to select the option and device will process the transaction.
- On successful transaction, a message will be displayed on the screen and printed receipt will be generated.
- The customer also gets SMS alert from their bank after the transaction is successfully completed
What all transactions can be performed by a Micro ATM?
- Cash Deposit
- Cash Withdrawal
- Fund Transfer
- Balance Enquiry
- Aadhar Seeding
- eKYC based saving account opening
Benefits of Micro ATM
- Encourages financial inclusion by providing rural population easy access to micro banking services in effective manner
- Micro ATM can be significant tool in extending banking services in the remote areas
- It is a low cost and easy alternative to the regular ATM
- These devices are portable, thus, increasing the reach of the services
- Easy to carry and setup anywhere in the remote area
- UIDAI complaint, biometric enabled secured transactions
- Micro ATMs are interoperable devices that can work for any bank
10 things to know about Aadhaar-enabled micro ATMs as mentioned by UIDAI
- Aadhaar-enabled micro ATMs are like modified Point of sales (POS) device.
- These micro ATMs enables customers to perform basic financial transactions using only their Aadhaar number and their biometrics (fingerprints or iris) for identity verification.
- According to UIDAI, the payments done by micro ATMs are only approved and authorized by banks.
- The authentication is done by UIDAI via biometric association with the database.
- Micro ATMs banking solutions are aimed at enhancing card less and PIN less banking.
- These POS machines can be easily carried along, hence, helps BCs bring basic banking services at doorsteps of the customers.
- No extra service charges are levied on customers for the transactions done through such micro ATMs.
- Unlike an ATM, the cash-in / cash-out functions of the micro ATMs are performed by an operator/ BC, thus cutting down the cost of the device and the cost of servicing the customer.
- The micro ATMs supports basic banking transactions like cash deposit, cash withdrawal, fund transfer and balance inquiry for bank account, just like a regular ATM.
- These are appropriate for Indian rural areas where reach of ATMs is very less.