Withdrawing cash from ATM? It will soon cost you more
RBI’s ATM fee revision kicks in next month, but customers will still be eligible for limited free transactions every month
From next month, you may end up paying more when you swipe your debit/ATM card to withdraw cash.
The Reserve Bank of India (RBI), in June, announced that the interchange fee at ATMs is being hiked to ₹17 from the earlier ₹15. For non-financial transactions, the fee has been raised from ₹5 to ₹6. Interchange fee refers to the fee that banks charge to merchants processing payments through credit or debit cards.
“To compensate the banks for the higher interchange fee and given the general escalation in costs, they are allowed to increase the customer charges to ₹21 per transaction. This increase shall be effective from January 1, 2022,” said the RBI in its notification. “Applicable taxes, if any, shall be additionally payable.”
Free transactions
However, customers will still be eligible to five free transactions each month when they use the ATMs of their home banks. Also, they are eligible to some free transactions from the ATMs of other banks — three a month if they live in metros and five in non-metros.
A Mint report recalled that the changes were announced on the lines of the suggestions of a committee set up in June 2019 by the RBI, under the chairmanship of the chief executive of the Indian Banks’ Association (IBA).
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The committee reviewed all ATM charges and fees, focusing particularly on interchange charges. It pointed out that the cost of ATM deployment and maintenance expenses have risen sharply, and the banks need to bear the costs.
“It is observed that the last change in interchange fee structure for ATM transactions was in August 2012, while the charges payable by customers were last revised in August 2014. A substantial time has thus elapsed since these fees were last changed,” the RBI notification said.
According to a PTI report, as on March 31, 2021, there are 115,605 onsite ATMs and 97,970 off-site ATMs in the country. In all, about 90 crore debit cards have been issued by different banks.