Competition Law Issues Affecting White Label ATM Operators in India

Introduction

White Label ATM Operators (“WLA Operators”) were introduced by the Reserve Bank of India (“RBI”) as part of a strategy to improve access to banking services in under-banked areas. WLA Operators are permitted to deploy and operate ATMs under their own brand, but they cannot accept deposits. Their business model requires them to rely on sponsor banks for cash supply, settlement, and vaulting, and on the National Payments Corporation of India (“NPCI”) for network switching through the National Financial Switch.

This dependency places WLA Operators in a structurally fragile position. Their sustainability is influenced not only by regulation but also by the behaviour of entities that are, in effect, both suppliers and competitors. As such, several issues fall within the scope of the Competition Act, 2002 (“the Competition Act”), particularly under Section 3 (anti-competitive agreements) and Section 4 (abuse of dominance).

Relevant Market

The question of how to define the relevant market is central to competition law analysis. From the cardholder’s perspective, a withdrawal at a bank-owned ATM and a withdrawal at a White Label ATM are functionally identical. Both are interoperable through NPCI’s National Financial Switch and both meet the same need. On this basis, one could consider the relevant product market as the provision of cash withdrawal services through ATMs in India.

However, the more acute competition concerns for WLA Operators lie upstream. Cash can only be sourced from sponsor banks, and all switching must be routed through NPCI. These are essential inputs without which WLA Operators cannot operate. It may therefore be appropriate to consider, alongside the downstream ATM market, upstream markets for cash supply and settlement services, and for switching services. These vertical relationships are where issues of access, delay, or discriminatory treatment are most likely to arise.

Interchange Fees and Margin Squeeze

The business model for ATMs is highly sensitive to interchange fees, which are set by the RBI in consultation with NPCI. With effect from 1 May 2025, the interchange fee was increased to ₹19 for financial transactions and ₹7 for non-financial transactions, while the maximum surcharge that can be levied on customers beyond free transactions was raised to ₹23. This revision provided welcome relief to operators facing rising costs.

Yet, the benefit may be eroded if sponsor banks or service providers increase other charges such as cash-handling or settlement fees. Where such increases in upstream charges significantly reduce the margins available to downstream operators, the conduct may raise concerns of margin squeeze. In competition law, margin squeeze refers to a situation where a vertically integrated or dominant enterprise supplies an essential input to downstream competitors but sets terms that make it unviable for those competitors to operate. Section 4(2)(a)(ii) of the Competition Act expressly prohibits imposing unfair or discriminatory prices in the purchase or sale of goods or services. In the context of WLA Operators, careful monitoring of how sponsor banks price ancillary services will be important.

Access to Cash and the Essential Facilities Principle

Cash supply is indispensable to the functioning of White Label ATMs. RBI circulars make WLA Operators responsible for ensuring that notes are genuine and fit for circulation, but operators are not permitted to source cash independently. They must rely exclusively on sponsor banks for replenishment and settlement.

Competition law often describes such scenarios through the essential facilities principle. The idea is that where an input is indispensable for downstream competition and cannot reasonably be duplicated, the entity controlling that input should provide access on fair and non-discriminatory terms, subject to objective justifications. Indian authorities have approached this cautiously, but CCI’s cases outline how the principle may operate in practice.

In MCX Stock Exchange Ltd. v. National Stock Exchange of India Ltd., the CCI found that NSE, which operated its own trading software (NOW) for currency derivatives, abused its dominance by refusing to share its API code with Financial Technologies of India Limited, thereby restricting the use of its rival software ODIN implicitly treating access to trading software as an essential facility.

In Arshiya Rail Infrastructure Limited v. Ministry of Railways & Ors., the CCI considered allegations that Container Corporation of India Ltd. (CONCOR), a public sector enterprise providing container rail freight services, denied rival container train operators access to its terminals and sidings. The CCI found that CONCOR was not dominant in the relevant market but clarified that the essential facilities doctrine applies only in limited situations: where the facility cannot be reasonably duplicated, access is technically feasible, denial of access risks eliminating competition, and access can be provided on reasonable terms. Since competing operators could establish their own terminals, the CCI held that CONCOR’s facilities were not essential. On the facts, the CCI found the facility could be replicated and therefore did not treat it as essential.

In the Shri Shamsher Kataria v. Honda Siel Cars & Ors, original equipment manufacturers (“OEM”) were found to have abused their dominance by denying independent repairers access to spare parts, diagnostic tools, and manuals. The DG characterised these as “essential facilities” since they were controlled by OEMs, could not be duplicated, and were indispensable for competing in repair and maintenance. While the CCI upheld the finding of abuse, it did not expressly invoke the essential facilities doctrine, reflecting its practice of applying the doctrine only by implication and thereby expanding its scope without formal acknowledgment.

Read together, these decisions suggest a careful and fact-specific approach. For WLA Operators, uninterrupted access to cash is a non-substitutable input. Currency distribution cannot be independently duplicated by operators, and delays or differential terms can directly affect the ability to compete for withdrawals in the downstream ATM services space. While Indian jurisprudence has not articulated a freestanding essential facilities doctrine, the concern is substantively reflected in Section 4(2)(c) of the Competition Act, which addresses denial of market access by a dominant enterprise. In this setting, ensuring timely and non-discriminatory cash supply, subject to legitimate operational constraints, supports competitive neutrality between WLA Operators and bank-owned ATMs.

Cash-Outs, Penalties, and Incentive Structures

RBI regulations stipulate that ATMs should not remain out of cash for more than ten hours in a month, and penalties are imposed on the cash-loading bank for breaches. This design may unintentionally create incentives for banks to prioritise replenishment of their own ATMs to reduce their penalty exposure. Where this results in systematic delays for WLA Operators, the effect could be to disadvantage them in competition for customer transactions.

Such prioritisation could potentially be examined under Section 4(2)(a)(i) of the Competition Act, which prohibits the imposition of discriminatory conditions in the provision of services. The concern is not that banks necessarily engage in such conduct, but that the regulatory structure makes WLA Operators vulnerable to it, and that vigilance is therefore warranted.

Interoperability and Network Access

All ATM transactions, including those at White Label ATMs, must be routed through NPCI’s National Financial Switch. NPCI is not a regulator in the statutory sense but a utility created to provide common infrastructure for payment systems. Its role in certification of operators, dispute resolution, and roll-out of new functionalities such as UPI-on-ATM directly affects the ability of WLA Operators to compete effectively.

Where access to such network functionalities is delayed or provided on differential terms, questions may arise under Sections 3 and 4 of the Competition Act. Although NPCI is structured as a not-for-profit entity, its responsibility for ensuring transparent and non-discriminatory access is central to maintaining a level playing field. The point is to recognise the competition law significance of NPCI’s role as a gatekeeper to essential infrastructure.

Vertical Agreements and Contractual Structures

The operational model for WLA Operators involves a web of vertical agreements, that is, agreements between entities at different levels of the supply chain. These typically include arrangements with sponsor banks for settlement and cash supply, with cash-in-transit agencies for logistics and vaulting, and with managed service providers for technology and maintenance.

Some of these agreements may contain exclusivity clauses, most-favoured-nation provisions, or bundling requirements. While such clauses may be commercially justified in particular contexts, they could also be scrutinised under Section 3(4) of the Competition Act if they have the effect of foreclosing alternatives or limiting competition between vendors. The analysis would turn on the specific terms and their effect on market dynamics, but the structurally dependent position of WLA Operators makes it important to review these agreements carefully.

Jurisdictional Interplay between RBI and CCI

The Competition Act is a special statute with cross-sectoral jurisdiction. The CCI is not confined to any one industry. At the same time, WLA Operators function under RBI’s regulatory oversight and NPCI’s operational infrastructure, raising questions about concurrent jurisdiction.

In CCI v. Bharti Airtel Ltd. (2019) 2 SCC 521, the Supreme Court held that sectoral regulators have primacy in deciding technical issues within their expertise. Once those matters are resolved, however, the CCI retains jurisdiction to assess whether conduct amounts to a contravention of the Competition Act. This sequencing respects the expertise of the sectoral regulator while preserving the CCI’s authority to address competition concerns.

In Coal India Ltd. v. CCI (2023) 10 SCC 345, the Supreme Court clarified that the existence of another forum does not oust the jurisdiction of the CCI. Conduct that potentially contravenes Sections 3 or 4 of the Competition Act may still be examined by the CCI, even if another regulator also has authority over related matters.

By contrast, in Telefonaktiebolaget LM Ericsson (Publ) v. CCI 2023 SCC OnLine Del 4078, the Delhi High Court held that disputes relating to the exercise of patent rights should be confined to the Patents Act, 1970, excluding the CCI. That decision is under appeal, and the Supreme Court’s eventual ruling will further clarify the boundaries.

For WLA Operators, the implication is that operational compliance issues fall to the RBI and NPCI, but once those questions are settled, the CCI remains the forum to adjudicate whether conduct amounts to denial of access, discriminatory treatment, or abuse of dominance. Section 62 of the Competition Act reinforces this by providing that its provisions are in addition to, and not in derogation of, other laws.

Conclusion

White Label ATMs play a significant role in furthering financial inclusion. The revision of interchange fees by the RBI in May 2025 provided temporary relief, but the sustainability of WLA Operators will depend on whether access to essential inputs such as cash supply and switching is ensured on fair and transparent terms.

The jurisprudence of the Supreme Court makes clear that the Competition Act operates in parallel with sectoral regulation. Sectoral regulators may address technical and operational issues, but the CCI remains empowered to examine anti-competitive conduct. For WLA Operators, this means that regulatory engagement must be combined with readiness to invoke the Competition Act where necessary. For policymakers, the challenge is to balance regulatory oversight with competitive neutrality, ensuring that the objectives of financial inclusion are not undermined by structural dependencies.