Micro ATMs [UPSC Notes]

Micro-ATMs are becoming popular in rural and semi-urban areas, enabling cash withdrawals, deposits, and transfers through business correspondents. They serve as a cost-effective and deployable option, backed by the Aadhaar Enabled Payment System. In this article, you can read all about micro-ATMs, their benefits, and how they work, along with other details for the IAS exam.

What are Micro ATMs?

Micro-ATMs are devices that function like point-of-sale terminals and are used by bank agents to authenticate transactions. Micro-ATMs can be used for deposits, withdrawals, fund transfers, balance inquiries, and mini-statements.

Image source: Business Standard

How Micro-ATMs Work

• Customers swipe their debit cards at a business correspondent’s (BC) device and receive cash from the BC’s cash till.
• Simultaneously, an equal amount is credited to the BC’s bank account.
• If the account is a savings account, it starts earning interest.

Benefits of Micro-ATMs

• Micro-ATMs are cost-effective for banks to deploy at multiple places in a shorter circumference area.
• They provide a more personalized service, as agents are available to assist with transactions.
• Micro-ATMs are critical in direct benefit transfers, as beneficiaries need both cash-out points and assistance.
• They are a lifeline for the unbanked and under-banked population in rural areas.

Growth and Popularity of Micro ATMs

• Micro-ATMs have grown significantly in semi-urban and rural areas, with an increase of 83.19% in the number of devices and a value of transactions of Rs 25,483 crore.
• The use of micro-ATMs is backed by the Aadhaar Enabled Payment System (AePS), which allows bank-account holders to make transactions using their Aadhaar number and biometric authentication.
• BC outlets constituted 97.5% of total banking outlets in villages in 2021-22.

Conclusion: In the future, micro-ATMs are likely to play an increasingly important role in the digitization of financial transactions, particularly in rural areas where access to traditional banking services is limited. As technology continues to advance, we may see further innovations in the design and functionality of micro-ATMs, making them even more accessible and user-friendly. Ultimately, the goal should be to create a financial system that is inclusive and equitable, and micro-ATMs have the potential to play a significant role in achieving that vision.

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