Get Ready To Pay More For ATM Transactions Beyond Free Permissible Limit From Jan 1

Banks are also allowed to raise 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

New Delhi: In a latest move that will have a bearing on the common man, the Reserve Bank of India on Thursday allowed banks to increase charges for cash and non-cash ATM transactions beyond free monthly permissible limit from next year.

What it means for customers?

For customers, it means they have to pay Rs 21 per transaction, instead of Rs 20, with effect from January 1, 2022 if the monthly limit of free transactions are exceeded. "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 said in a circular.

Normally, bank customers are eligible for five free transactions (inclusive of financial and non-financial transactions) every month from their own bank ATMs. Apart from this, three free transactions are allowed from other bank ATMs in metro centres and five in non-metro centres.

What are other significant changes?

Banks can also raise 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, as per the RBI circular. ATMs are deployed by banks for serving their own customers and also provide services to other banks'' customers as acquirers where they earn interchange income. It simply means that every time Bank A's customer uses their card to makes a transaction at an ATM deployed by Bank B, the former bank will be liable to pay a fee to latter, which is termed as the interchange fee.  Hence, if you are using other banks’ ATMs beyond the free limit, then customers will have to pay more from next year.

What’s the reason behind this hike?

The charges have been allowed to be increased due to increasing cost of ATM deployment and expenses towards ATM maintenance incurred by banks/white label ATM operators besides the need to balance expectations of stakeholder entities and customer convenience.

The apex bank had set up a committee in June 2019 under the chairmanship of the chief executive of 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 current charges have been decided based on the suggestions of the panel.

"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," it said.

These instructions shall also apply to transactions done at cash recycler machines, other than for cash deposit transactions.

 

There were 1,15,605 onsite ATMs and 97,970 off-site ones as on March 31, 2021. About 90 crore debit cards issued by different banks were outstanding at end-March 2021.