The Reserve Bank of India (RBI) has recently increased the ATM interchange fees, which will now make the money out of ATM expensive. This change will be applicable from 1 May 2025. The main objective of this decision is to promote digital banking, which reduces the dependence on cash transactions.
In this article, we will give detailed information about ATM interchange fees, which will discuss all these aspects, which will affect its effects, new rates, and customers.
The main reason behind the increase of ATM interchange fees is the increasing operational cost of white label ATM operators. These operators had demanded to increase the fees for a long time, which has now been approved by the RBI.
What is ATM interchange fee?
The ATM interchange fee is the amount that one bank gives on using another bank’s ATM. This fee is usually applied to customers, especially when they withdraw money from the ATM of any bank other than their bank.
Description of ATM Interchange Fee
In the table below, important information related to ATM interchange fees is given:
| Description | Information |
| Fee increase date | Will be applicable from 1 May 2025 |
| New cash withdrawal fees | ₹ 19 per transaction (first ₹ 17) |
| New Non-Cash Transaction Fee | ₹ 7 per transaction (first ₹ 6) |
| Free transaction limit | 5 in metro cities, 3 in non-Metro |
| Affected customer | Customers who often use other banks’ ATMs |
| Objective | Promote digital banking |
| Reason | Rising operational cost of white label ATM operators |
Impact of ATM interchange fee hike
This fee hike will affect the customers who often withdraw money from other banks’ ATMs. This change will also affect customers of small banks, as they are more dependent on the ATM networks of large banks.
The main point of effect:
- Customers burden on pockets: Customers will have to pay more fees due to increase in fees.
- Promotion of digital banking: This change will encourage digital transactions.
- Effect on small banks: Customers of small banks may have to pay more fees.
Due to ATM interchange fee hike
White label ATM operators had demanded an increase in fees due to increasing operational cost. The RBI has increased the fees by approving this demand. This decision is based on the proposal of the National Payment Corporation (NPCI).
Reasons Description:
- Operational Cost: The cost of ATM operators is increasing.
- NPCI proposal: RBI approved NPCI’s proposal.
- Promotion of digital banking: To encourage digital transactions instead of cash transactions.
Advice for customers
Customers are advised to use their home bank ATMs or opt for digital payment. This will help them to avoid additional charges. Customers can make their transactions cheaper and convenient using digital media like UPI, mobile banking, internet banking.
The main point of advice:
- Use home bank ATMs.
- Choose the option of digital payment.
- Use UPI and Mobile Banking.
conclusion
An increase in ATM interchange fees by RBI is an important step, which will help promote digital banking. However, this can prove to be a bit expensive for customers, especially for those who often use ATMs of other banks. Customers are advised to choose digital payment and use their home bank ATMs, which will help them to avoid additional charges.
Rejuvenation
This article provides information about the ATM interchange fee hike, which will be applicable from 1 May 2025. This change is real and aims to promote digital banking. Customers are advised to choose digital payment to make their transactions cheaper and convenient.
