Withdrawing cash from ATMs in India will become costlier from May 1, as the Reserve Bank of India (RBI) has raised interchange fees.
This means customers who rely on ATMs for financial transactions will have to pay additional charges once they exceed their free transaction limit.
An ATM interchange fee is a charge that one bank pays another for providing ATM services. Typically, this fee is a fixed amount per transaction and is often passed on to customers as part of their banking expenses.
The RBI in a notification decided to revise these charges in response to requests from white-label ATM operators, who pointed out that rising operational costs were negatively impacting their business.
The increased charges will apply nationwide and are expected to affect customers, particularly those with accounts at smaller banks. These banks, which rely on larger financial institutions for ATM infrastructure and services, are more vulnerable to rising costs.
Starting May 1, customers will incur an additional Rs 2 fee for each financial transaction exceeding the free limit.
For non-financial transactions, such as balance inquiries, the fee will increase by Rs 1. As a result, withdrawing cash from an ATM will cost Rs 19 per transaction, up from the earlier Rs 17.
Checking account balances will now cost Rs 7 per transaction, according to the official notification.
ATMs, once seen as a revolutionary banking service, have been struggling in India due to the rise of digital payments.
The convenience of online wallets and UPI transactions has significantly reduced the need for cash withdrawals.
Government data shows that digital payments in India were valued at Rs 952 lakh crore in FY14. By FY23, this figure had jumped to Rs 3,658 lakh crore, reflecting a massive shift towards cashless transactions. With this new fee hike, customers who still rely on cash transactions may feel the burden, further pushing them toward digital alternatives.
