Your ATM withdrawals will now cost more as RBI raises interchange fees; new changes & other details

The Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) have approved a Rs 2 increase in the ATM interchange fee for cash withdrawals. This change was communicated to member banks by NPCI on March 13, with the new fees set to take effect from May 1, 2025.

On March 6, 2024, the National Financial Switch Steering Committee approved raising the ATM interchange fee for domestic financial transactions to Rs 19 and non-financial transactions to Rs 7. Following this, NPCI sought RBI’s approval to implement the changes. The revised fee will be subject to Goods and Services Tax (GST), which will be added separately.

In a letter dated March 11, the RBI informed NPCI that the ATM interchange fee could be determined by the ATM network itself. NPCI has notified the RBI of the date when the revised fee will be implemented, as stated in the letter circulated to member banks, which ET has reviewed.

An earlier report from ET, published on June 13, 2024, revealed that ATM operators’ association had proposed an increase in the interchange fee, potentially raising it to Rs 23 to make the business more profitable.

In 2021, the interchange fee for ATM transactions was raised from Rs 15 to Rs 17. Additionally, the maximum fee that could be charged to customers per transaction was increased from Rs 20 to Rs 21. This fee is typically passed on to customers as part of their banking costs and is charged by the bank that issues the card (issuer) to the bank where the ATM transaction takes place (acquirer).

Currently, savings account holders in six metro cities—Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, and New Delhi—are entitled to five free transactions per month at their own bank’s ATMs. Additionally, three free transactions are allowed at other banks’ ATMs.Sources have confirmed that the increase in the ATM interchange fee will be passed on to customers. At present, banks absorb the costs associated with free transactions.The NPCI letter also mentioned that for ATM transactions in Nepal and Bhutan, the interchange fee for balance inquiries will be set at Rs 7, excluding GST. However, the fee for cash withdrawal transactions remains unchanged.

The revised interchange fee will not apply to Micro-ATMs, interoperable cash deposit transactions, or international ATM withdrawals.