Non-bank entities to provide ATM service

The Bangladesh Bank has allowed non-bank entities to operate automated teller machines (ATMs) across the country with a focus on increasing the banking network in rural areas at an affordable cost.

To this end, the central bank's payment systems department, on Sunday, issued Guidelines for White Label ATM and Merchant Acquiring Services.

ATMs set up, owned and operated by non-bank entities are called White Label ATMs.

At present, all ATMs have been installed, owned and managed by banks – that is why installing ATMs, for a few customers of a particular bank in rural areas, was found to be very costly. It deprives a large segment of rural populations from obtaining banking services.

To bring unbanked people under financial services, the Bangladesh Bank issued Sunday's guidelines, setting an urban to rural ratio of one to three.

This means a White Label ATM and Merchant Acquiring Services licencee will have to install three ATMs in rural areas if it installs one ATM booth in an urban area.

Such ATMs will allow cash withdrawals and deposit, funds transfers, bill payment, POS or QR retail purchases, POS or QR bill payment, and other services which are permissible by the central bank.

A service recipient will be able to check their balances and receive mini-statements from the booths.

Along with the clients of banks, the customers of mobile financial service providers and non-bank financial institutions will be able to use the ATM service against their accounts and credit cards if the respective entity opts-into the services of White Label ATM and Merchant Acquiring Services licencees.

How much customers will have to pay to avail the service was not specified in the Bangladesh Bank's guidelines.

However, an official of the central bank said the charge will likely be the same as that of using a bank card in another bank's ATMs, and the Bangladesh Bank may determine the charge based on the response from customers.

Apart from operating ATMs, the guidelines also allowed a White Label ATM and Merchant Acquiring Services licencee to operate as Merchant Acquiring Services.

Under the services, White Label ATM and Merchant Acquiring Services would offer in-store merchant acquiring services – such as point of sales or QR code-based payments along with providing e-commerce merchant acquiring facilities.

For providing both ATM and merchant acquiring services, a White Label ATM and Merchant Acquiring Services entity has to ensure Tk45 crore of paid-up capital along with Tk10 crore of a bank guarantee.

To provide ATM service only, there would be no requirement of a bank guarantee.

The paid-up capital and bank guarantee requirement would be Tk10 crore for securing each merchant acquiring service provider licence.

The total number of ATM booths in the country reached 10,961 at the end of January this year. Of these, 3,274 ATM machines were installed in rural areas. At the same time, the country's total POS number was 60,464, of which only 2,614 POS were in rural areas.