The Reserve Bank of India (RBI) on Thursday allowed an increase in the interchange fee structure for ATM transactions after almost 9 years, considering the increasing cost of Automated Teller Machines (ATM) deployment and expenses towards ATM maintenance incurred by the banks and white label ATM operators.
The Reserve Bank of India (RBI) has hiked the interchange fee for ATMs to Rs 17 from Rs 15 effective January 2022. The interchange, which is the charge banks pay each other when their customers use ATMs of another lender, was last revised in 2012.
While the Rs 17 fee will apply to withdrawals, for non-financial transactions the interchange will go up from Rs 5 to Rs 6. For customers, the ATM withdrawal charge will go to Rs 21 from Rs 20 if they exhaust their free transactions.
The card issuing bank pays an interchange fee to the operator of the ATM when a customer makes a transaction at an ATM that does not belong to the card-issuing bank. Currently, the card-issuing bank pays an interchange fee of Rs 15 for each cash transaction and Rs 5 for each non-cash transaction.
The ATM operators had been pushing for a hike in interchange for some time now but banks were not on the same page on the issue as, ultimately, the extra cost would have to be borne by the customers.
Customers are eligible for five free transactions (inclusive of non-financial transactions) every month from their own bank ATMs. They are also eligible for three free transactions from other bank ATMs in metros (five in non-metro centres).
The RBI said that the decision was taken given the increasing cost of ATM deployment and expenses towards ATM maintenance incurred by banks/ white label ATM operators, as also considering the need to balance expectations of stakeholder entities and customer convenience.
According to Pranay Jhaveri, country manager India and South Asia at Euronet Worldwide, the revision in charges were long overdue. “Both cash and digital payments are important pillars supporting the growth of the economy,” Jhaveri said. “This move will definitely give a fresh impetus to deployment of ATMs across India and help improve the penetration.”
In its notification, the banking regulator said the interchange fee structure was last revised in August 2012, while customer charges were revised in August 2014.
