RBI Increases ATM Interchange Fee From Rs 15 to Rs 17 Per Transaction

RBI Increases ATM Interchange Fee From Rs 15 to Rs 17 Per Transaction An individuals entering his/her ATM pin (Photo Credit: Pexels)

New Delhi: The Reserve Bank of India (RBI) announced on Thursday said that banks will be able to charge a higher interchange amount on automated teller machine (ATM) transactions, increasing it to Rs 17 per financial transaction.

According to the official release, RBI has opted to hike the interchange fee per transaction from Rs 15 to Rs 17 for financial transactions. Meanwhile, for non-financial transactions in all centres from Rs 5 to Rs 6. This circular will come into effect from August 1, 2021.

The bank, that issued the ATM card, pays an interchange fee to the operator of the machine when a customer makes any sorts of transaction at an ATM which does not belong to the card-issuing bank. At present, the card-issuing bank pays a fee of Rs 15 for every cash transactions and Rs 5 for each non-cash transaction.

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For some time now, the ATM operators had been pushing for an increase in interchange but banks did not agree on the issue as, ultimately, the extra cost would have to be paid by the customers.

In June 2019, the RBI had constituted a committee to go over the entire gamut of ATM charges and fees while keeping an eye on interchange structure for ATM transactions.

“The recommendations of the committee have been comprehensively examined. It is also 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 said revising the interchange fees for ATM transactions.

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The release also said, “Customers are eligible for five free transactions (inclusive of financial and non-financial transactions) every month from their own bank ATMs. They are also eligible for free transactions (inclusive of financial and non-financial transactions) from other bank ATMs viz. three transactions in metro centres and five transactions in non-metro centres. Beyond the free transactions, the ceiling / cap on customer charges is ₹20 per transaction, as prescribed vide circular DPSS.CO.PD.No.316/02.10.002/2014-2015 dated August 14, 2014. 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.”

It also added that applicable taxes, if any, shall be additionally payable. These instructions shall also apply, mutatis mutandis, to transactions done at Cash Recycler Machines (other than for cash deposit transactions).

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