ATMs for everybody under the sun
In June, the International Finance Corporation, a member of the World Bank, invested $2.7 million in a Chennai-based entrepreneur who builds solar-powered ATMs for rural areas. Think ATMs in villages with no electricity and happier rural folk
Over the next few years, if you travel to the interiors of Maharashtra and other states in the country, you’re most likely to find yourself in a queue outside an ATM even in a village sans electricity. The automated voice in the ATM may surprise you by speaking in the local language — but that’s just the beginning. It will provide transaction receipts in the local language, too, all the while running on solar power.
Last month, the International Finance Corporation, which is a member of the World Bank, announced that it will invest $2.7 million as equity in Vortex Engineering, a Chennai-based developer of low-cost, solar ATMs. This, coupled with the bids opened by the Ministry of Finance last month, which further chose vendors who will roll out ATMs at public sector banks in the country in a cost-effective manner, will help Vortex set up over 2,000 low-cost ATMs in the most remote regions of the country. Vortex participated in the bidding as a consolidation with another outsourcing vendor from Maharashtra.
After four years of research, Vijay Babu, the COO of Vortex Engineering, started the company in collaboration with IIT Madras in 2008. Today, he has built 600 ATMs all across India.
“From the outside, a solar-powered ATM looks no different from a regular ATM which uses electricity,” says 48 year-old Babu, over the telephone from Chennai. “You can see the difference only when you step in. And, of course, the machine and process is totally different from a regular ATM,” he smiles.
A solar-powered ATM, explains Babu, has eight hours of back-up power and uses less than 100 watts of electricity, as compared to a regular ATM, which uses more than 600 watts. So, the cash dispensing mechanism inside is built differently from a regular one. In a regular ATM, cash is kept in a box (called cassette) and travels 1 metre to move up on a conveyor belt when a user enters the requisite amount. The cassette is placed horizontally. “In the solar-powered ATM, we have done away with the conveyor belt, which uses up most of the electricity and, instead, keep cash in a vertical cassette with a simpler design, called Gravity Assisted Friction Pick. Currency notes are kept on a roller, which then come down to the user thanks to gravity. Even when notes start depleting, the dead weight attached at the end of the box ensures that it keeps pushing the notes towards the user. In Mumbai, you can find one Vortex solar ATM at Andheri.
“A regular ATM usually needs 200 transactions daily to be economically viable to the bank, but a solar ATM needs only 75. So, even if you set it up in a village without electricity, it’s worth it because at least 75 people will use it every day,” says Babu.
ATM penetration, he adds, has dramatically increased in the country over the past five years. In 2008, India had 35,000 ATMs all across the country and, today, we have over 80,000 ATMs. Over the next two years, India will have 1.75 lakh ATMs. Vortex plans to build 65,000 ATMs over the next couple of years, and at least 30 percent, says Babu, will run on solar energy.
And he plans to go bigger. “This month, we are launching ATMs in the country which can offer currency notes in four denominations — instead of the current two — to locals in rural areas,” he says.