The demand for one million micro-ATMs for the Aadhaar-based payment system has emerged as a bonanza for the technology industry. Manufacturers are ready to lap up the opportunity as soon as the government gives it the go-ahead. The plan will likely figure in this year’s Budget.
A task force led by Unique Identification Authority of India’s (UIDAI) chairman, Nandan Nilekani, has recommended a payment platform using micro-ATMs to disburse cash subsidies and entitlements under government schemes.
The requirement of one million units would entail a huge market for firms such as HCL Infosystems, Geodesic, VeriFone, Visiontek and others manufacturing micro-ATMs.
Pran Mehra, executive director, VeriFone India sales, believes the roll-out of micro-ATMs is a huge opportunity. “As a company, we are well entrenched in this space as we already work with most of the banks. But, with UIDAI rolling out micro-ATMs, every partner in this programme will need a device for payment. From an opportunity aspect, I will highlight just one area: India has 550,000 ration shops and each will need at least two devices to capture user biometrics,” he says. Mehra says, at present, the company imports 55,000-65,000 payment devices quarterly, which would rise.
| HOW IT WILL WORK |
| * Banking correspondents will get micro-ATMs to pay beneficiaries |
| * To work on lease model, wherein banks charge Rs 300 monthly from users for operating push terminals |
| * Rs 3,000-5,000 income to be ensured for banking correspondents to make the business viable |
| * 3.14% has been suggested as transaction fee |
| * Of the 3.14% or a maximum of Rs 15, banking correspondents will get 75% |
The technology firms that have shown interest in Aadhaar payments include AMDL, Evolute, Geodesic, HCL, Ingenico, Integra, Nokia, VeriFone and Visiontek. All are manufacturers of handheld devices that can be used for micro-ATM processes.
According to industry players, micro-ATM prices are Rs 10,000-20,000 each. These devices have a built-in biometric system and allow customers to conduct basic financial transactions using only their Aadhaar number and fingerprint as identity.
Micro-ATMs will support functions like deposits, withdrawals, fund transfers and balance enquiries.
In the Aadhaar-based payment model, the total funds that can be disbursed through micro-ATMs is Rs 1.5 lakh crore in entitlements under various schemes and the same amount in subsidies — Rs 3 lakh crore in all.
The amount is likely to rise to Rs 5 lakh crore in the next few years, says A P Singh, Deputy Director General, UIDAI.
Mumbai-based Geodesic, already working with UIDAI and Bank of India in Jharkhand on a pilot for this system, feels with this project and banks' financial inclusion efforts, the use of technology and such devices would become mainstream. That, it seems, convinced the company to set up a manufacturing plant in Rourkee in 2009. "We started by manufacturing 60 devices a day and have now scaled up to almost 300. When the demand goes up, we are well placed to double or treble production," says Arnab Ganguly, VP-Business Development, Geodesic. He says the deal size from a bank could range Rs 7-8 crore. "That will go up, depending on the number of devices banks need," he says.
Keeping the huge business opportunity in mind, most of these vendors are already working with banks on financial inclusion initiatives. For instance, VeriFone is working with Axis bank. HCL Infosystems is working with Bank of India, Bank of Baroda, Central Bank, Syndicate Bank, Punjab National Bank and UCO Bank, among others.
A P Singh says a micro-ATM costs around Rs 10,000, which would come down with economies of scale to about Rs 5,000. Micro-ATMs are like push terminals installed in purchasing stores but with a biometric reader. Adding a biometric reader to the push terminal costs nearly Rs 2,000.
