Rise Of Micro ATMs: Here’s How It Can Be A Game Changer For Financial Inclusion

By Manish Kumar Goyal

For many years, banking in India often involved enduring lengthy waits in crowded bank branches, a far cry from the ease of services available in urban centres. However, a remarkable change is taking place, fuelled by the rising use of micro ATMs. These small machines are transforming local shops into convenient banking hubs in rural and semi-urban areas across the nation. As a result, this shift is playing a crucial role in propelling India's swift economic advancement.

Addressing Service Accessibility Gaps

While efforts to bridge service accessibility gaps are ongoing, many Indian citizens, particularly those residing in rural and semi-urban areas, still encounter difficulties in accessing essential banking services. Remote regions often find themselves facing significant challenges because of poor infrastructure, particularly in terms of ATMs.

Take rural India, for example, where over 65 per cent of the population resides, yet they have access to merely 20 per cent of the nation's ATMs. This glaring difference highlights the urgent call for better digital infrastructure in these neglected regions.

The Functionality and Affordability of Micro ATMs

These handheld POS devices serve a dual purpose, functioning not only as card payment terminals but also as banking outlets. Micro ATMs empower local merchants to act as de facto bank branches, bypassing cumbersome banking procedures and making cash withdrawals remarkably convenient.

Available at zero extra cost, micro ATMs are fundamentally changing how people access financial services. These devices are beneficial for those individuals who need to undertake long journeys to bank branches. Instead, they can conveniently check their account balance, cash withdrawal without any hassle.

The Rapid Expansion and Popularity of Micro ATMs

In contrast to traditional ATMs, micro ATMs have experienced modest growth. According to a data report, the number of ATMs dropped from 219,000 in September 2023 to 215,000 in September 2024, with a significant decline in off-site ATMs — from 97,072 in September 2022 to 87,638 in September 2024.

On the flip side, by September 2024, there were about 1.46 million micro ATMs, which is an increase of more than 18 per cent from 1.24 million in September 2022.  All of these figures demonstrate a huge improvement in how easily people can access financial services.

The Simple Operation of Micro ATMs

A micro ATM operates on a principle similar to a standard ATM, yet it distinguishes itself through its portability and user-friendliness. The process commences with the customer inserting their debit card into the micro ATM.

Subsequently, the customer inputs their Personal Identification Number (PIN) via the secure keypad, which is a crucial step for verifying the cardholder's identity and ensuring authorised access to the account. Upon successful authentication, the customer specifies the desired withdrawal amount. Finally, the merchant disburses the equivalent cash amount to the customer. 

Advantages of Micro ATMs

Micro ATMs are making a positive impact as they are able to enhance the accessibility of banking services to the public. These devices also provide employment opportunities for the people who need them the most. Most importantly, these devices create jobs for the people who need them the most. These compact devices let people with bank accounts access their accounts from anywhere at any time. This is very helpful for women who live in rural places because it helps them get more involved in the economy.

The rise in transactions and cash withdrawals shows that they are having a good effect. In addition, local merchants are also enjoying benefits. They play the role of business correspondents with these devices. Hence, they can earn by receiving transaction fees. For banks, serving micro ATMs in remote regions is an effective strategy. It allows them to provide under-resourced populations with adequate services. This encourages better use of available funds. These small gadgets are not just improving the availability of services. They're boosting the customer base at banks and helping the economy overall. 

In short, micro ATMs in India are stepping up to close the financial inclusion gap, playing a key role in uplifting communities. They also support local economic development. This fundamentally transforms the country's financial landscape and indicates a promising future for India.

(The author is the chairman and managing director at Finkeda)

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