ATM Withdrawal Charges to Increase From This Date: Check Details

Starting May 1, withdrawing cash from ATMs will become more expensive as the Reserve Bank of India (RBI) has raised interchange fees, according to a DD News report on Tuesday. Customers who exceed their free transaction limits at ATMs will now face additional charges for financial and non-financial transactions.

Key Changes in ATM Transaction Fees

As per the report, these increased fees will result in an increase in charges for both financial and non-financial transactions at ATMs. For Financial transactions charges will incur an extra Rs 2 fee for any transaction that exceeds the free limit. The fee for checking account balances will increase from Rs 6 to Rs 7 due to a Rs 1 increase for non-financial operations like balance queries. Also, withdrawing cash from ATMs will now cost Rs 19 per transaction, a rise from the earlier charge of Rs 17.

Understanding ATM Interchange Fees

An ATM interchange fee is a charge that one bank pays another for providing ATM services. Customers pay this fee which is usually a set amount per transaction, as part of their banking costs. The RBI’s decision to raise these charges follows requests from white-label ATM operators, who have cited rising operational expenses that were affecting their businesses. This increase in charges is expected to have a significant impact on customers, particularly those using smaller banks.

As per RBI guidelines, savings account holders are entitled to a minimum of three free transactions per month at other banks' ATMs (Off-Us transactions) in six metro locations: Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, and New Delhi. Additionally, most banks in India allow five free transactions per month at their own ATMs. For other banks' ATMs, customers are permitted up to three free transactions in metro areas and five free transactions in non-metro areas.

Changes in Minimum Balances

Also, a number of banks are revising their minimum balance requirements, such as SBI, Punjab National Bank, and Canara Bank. The required balance will now change based on whether the account is situated in an urban, semi-urban or rural area. Penalty penalties may be incurred for failing to maintain the recommended balance.

Shift Towards Digital Payment

The rise of digital payments in India is making ATM usage less necessary. As online wallets such as UPI become more widely used, cash withdrawals are becoming less common. According to government data shared by DD News, digital payments grew from Rs 952 lakh crore in FY14 to Rs 3,658 lakh crore in FY23, a clear indication of the country’s move towards cashless transactions.

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