ATM transactions to cost more from Aug 1

From August 1 onwards, banks will increase the interchange fee per transaction at ATMs to Rs 17 from Rs 15 for financial transactions and from Rs 5 to Rs 6 for non-financial transactions in all centres, an RBI statement said.

The Reserve Bank of India had constituted a committee in June 2019 under the Chairmanship of the Chief Executive, Indian Banks' Association to review the entire gamut of Automated Teller Machine (ATM) charges and fees with particular focus 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. Accordingly, given the increasing cost of ATM deployment and expenses towards ATM maintenance incurred by banks / white label ATM operators, as also considering the need to balance expectations of stakeholder entities and customer convenience.

Talking to Bizz Buzz on condition of anonymity a former MD of SBI said, "The banks had been representing to RBI for quite some time that the rates fixed earlier by the apex bank for this was out of their pocket and hence it was operationally becoming unviable." However, RBI wanted that it should be beneficial to customers as well and the current development is a fallout of that, he added.

Hence, RBI has decided to allow increase in interchange fee per transaction from Rs 15 to Rs 17 for financial transactions and from Rs 5 to Rs 6 for non-financial transactions in all centres. This shall be effective from August 1, 2021.

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 Rs 20 per transaction, as prescribed vide circular 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 Rs 21 per transaction. This increase shall be effective from January 1, 2022, the RBI statement said. This directive is issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).