The macro impact of microATMs

The rapid pace of digitization of payments in India, especially in large cities, has meant stagnation for the ATM industry. But in the overall economy cash remains in massive demand, especially in rural areas. How is that demand met? Answer: microATM terminals.

These terminals help people in rural areas withdraw cash transferred to their accounts from government schemes, pay digitally using biometric authentication, and even allow card payments directly. MicroATMs serve two purposes: encouraging digital payments in rural India, and meeting their demand for cash.

The number of microATMs in India increased to more than 474,000 in July from about 264,000 in February 2020, as per Reserve Bank data.

This proliferation of microATMs is expected to have a significant impact on India’s banking ecosystem. ATMs are meant to serve as micro bank branches in areas where setting up a branch is not cost-effective. Advancements in technology have now made it possible for small retailers and shop owners to also function as local banking points. These agents can offer services such as cash withdrawal, bill payments, ticket booking, insurance payments, and even small loans.