Synopsis
Starting from May 1, ATM withdrawals in India will be more expensive due to an increase in interchange fees approved by the Reserve Bank of India. Customers will incur additional charges for transactions exceeding their free limit, impacting particularly those using smaller banks.Key Takeaways
- ATM fees will increase starting May 1.
- Customers will pay Rs 2 extra for financial transactions beyond the free limit.
- Non-financial transactions will see a Rs 1 increase.
- Smaller banks may be more affected by the fee hike.
- Digital payment methods are on the rise in India.
New Delhi, March 25 (NationPress) Effective May 1, accessing cash from ATMs across India will incur higher costs as the Reserve Bank of India (RBI) has sanctioned an uptick in ATM interchange fees.
This adjustment signifies that consumers who depend on ATMs for their monetary transactions will encounter added fees after surpassing their complimentary transaction threshold.
An ATM interchange fee denotes the expense one bank incurs to another for facilitating ATM services. Typically, this fee is a predetermined amount per transaction, often transferred to customers as part of their banking expenses.
The RBI's decision to modify these fees came in response to appeals from white-label ATM operators, who contended that escalating operational costs were detrimentally impacting their operations.
The hike in fees will be implemented nationwide and is projected to influence customers, particularly those associated with smaller banks.
These smaller banks depend on larger financial entities for ATM infrastructure and related services, rendering them more susceptible to increasing costs.
Beginning May 1, clients will incur an additional Rs 2 for every financial transaction exceeding the free limit.
For non-financial transactions, such as balance checks, the fee will rise by Rs 1. Consequently, withdrawing cash will now cost Rs 19 per transaction, an increase from the previous Rs 17.
Checking account balances will now be priced at Rs 7 per transaction, as per the official announcement.
ATMs, which were once regarded as a groundbreaking banking service, have faced challenges in India with the advent of digital payment systems.
The ease of online wallets and UPI transactions has substantially diminished the necessity for cash withdrawals.
Government statistics reveal that digital payments in India were valued at Rs 952 lakh crore in FY14, soaring to Rs 3,658 lakh crore by FY23, highlighting a significant transition towards cashless operations.
This new fee hike may impose a burden on customers who still depend on cash transactions, potentially nudging them towards digital solutions.
