RBI Approves ATM Fee Hike, Banks Likely to Pass Cost to Customers
NEW DELHI: The Reserve Bank of India (RBI) has approved a hike in ATM interchange fees. The fee for financial transactions will increase by Rs 2, while non-financial transactions will go up by Re 1. The new charges will take effect from May 1.
The change is expected to impact smaller banks more. They have fewer ATMs, so they rely on other banksโ networks. This will increase their expenses.
Banks have not yet decided if they will pass the fee hike to customers. But past trends suggest they will. โWhenever interchange fees were revised over the past 10 years, banks always passed the changes on to customers. This time will be no different, and banks are expected to hike fees for customers,โ said a senior bank official.
An ATM interchange fee is the amount one bank pays another when its customer uses an ATM from a different bank. This cost is often added to customer charges.
The new fee for financial transactions will be Rs 19 instead of Rs 17. Non-financial transactions, like balance inquiries, will cost Rs 7 instead of Rs 6.
According to media sources the decision to allow an increase in interchange fees was communicated by the National Payments Corporation of India (NPCI) to banks and other stakeholders on March 13. NPCI had requested an approval from the RBI to implement the hike
The RBI last revised these fees in June 2021. White-label ATM operators had asked for a hike. They said the current fees were too low to keep their business profitable.
At present, customers in metro areas get five free transactions per month on other banksโ ATMs. In non-metro areas, they get three free transactions. After that, banks charge customers for extra transactions.
Customers may soon see higher ATM withdrawal charges as banks adjust to the new fee structure.
