Soon, you may have to pay more to withdraw cash from an Automated Teller Machine (ATM). From next month, banks will increase the interchange fee structure for ATM transactions. The Reserve Bank of India has allowed banks to increase the interchange fee with effect from August 1, 2021. Keeping in view the rising cost of deployment and maintenance of ATMs, RBI has increased the interchange fee from ₹15 to ₹17 and ₹6 to ₹6 for financial transactions. 5 for non-financial transactions. “Applicable tax, if any, shall be payable additionally,” RBI said. The regulator said the new rates would also be applicable to transactions done at cash recycler machines (other than cash deposit transactions).
Interchange fee is the transaction fee that must be paid to the merchant’s bank account whenever a customer uses a credit/debit card. The card issuing bank pays an interchange fee to the operator of the ATM when a user transacts at an ATM that does not belong to that bank. Currently, the bank pays an interchange fee of Rs 15 for every cash transaction and Rs 5 for every non-cash transaction.
In view of the rising cost of ATM deployment and maintenance charges by banks or white label ATM operators, the central bank has decided to increase ATM transaction charges. In June 2019, RBI constituted a committee to review the entire scope of ATM fees and charges, with a special focus on the interchange structure for ATM transactions. The regulator has increased the charges for ATM transactions after almost seven years. “It is also observed that the last change in the interchange fee structure for ATM transactions was done in August 2012, while the charges payable by the customers were last revised in August 2014. Thus, the last change in these charges was done in August 2012. Substantial time has passed since then,” RBI said. in a notification.
Customers are eligible for five free transactions every month from their bank’s ATMs. This includes both financial and non-financial transactions. Exceeding the limit, they will have to pay an additional amount of Rs 20 for each ATM transaction. Three free ATM transactions are allowed in metro cities and five in non-metro centers for customers using other bank’s ATMs for cash withdrawal. RBI has now increased this interchange fee from Rs 20 to Rs 21 per transaction, with effect from January 1, 2022.
From August, ICICI Bank customers will get the first 3 transactions (including financial and non-financial) in a month across six metro locations including Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad. At all other locations, the first five transactions will be free. Beyond the free limit, the bank will charge ₹20 per financial transaction and ₹8.50 per non-financial transaction from next month. The new charges will be applicable for Silver, Gold, Magnum, Titanium and Wealth cardholders.
State Bank of India had earlier increased the charges for cash withdrawals from its ATMs and bank branches from July. The new charges are applicable for Basic Savings Bank Deposit (BSBD) account holders. For BSBD account holders, there are four free cash withdrawals available every month – including ATMs and bank branches. The bank now charges Rs 15 plus GST on every transaction after the free limit. Charges on cash withdrawal are applicable at home branches and ATMs and non-SBI ATMs.
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