Even beyond UPI, Indian payments space is changing

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₹70,000 crore so far this fiscal. Part of the reason is the government's decision to withdraw ₹2,000 notes from circulation in May this year. Meanwhile, the total number of ATMs increased by about 3,000, or by about 1.2%, during this period.

The growth was driven by banks setting more on-site ATMs (within their bank branches), even as they shuttered 3.5% of their off-site ATMs. The number of ATMs owned by non-banking entities (or, white-label ATMs), which was once considered to be a promising business, remained stagnant. White-label ATMs were expected to address India's low ATM penetration rates in rural areas, which is about 15 ATMs per 100,000 adults.

However, they have been constrained by high capital and operational costs. Micro ATMs—portable machines operated by banking correspondents at a fraction of the cost—are helping fill the gap. Their count doubled between September 2021 and September 2022, and increased another 20% over the next 12 months.

They currently number about six times standard ATMs. However, like standard ATMs, cash withdrawals from micro ATMs also dropped on a year-on-year basis in September—1.3% by transactions and 2.4% by value. Their usage is expected to pick up, driven by new payment banks.

Four of the top five deployers of micro ATMs are payment banks—promoted by NSDL, Fino, India Post and Airtel. In the past year alone, NSDL, Fino and Airtel together added 479,000 micro ATMs—about 85% of standard ATMs in place. Amid the UPI boom, Indians have also been lapping up credit cards.

The number of credit cards grew nearly 20% between September 2022 and September 2023. And unlike micro ATMs, they are being put to use. Credit card payments over point-of-sale (PoS) terminals, typically used by