RBI hikes ATM interchange fee from August 1
The RBI hiked ATM interchange fee from ₹15 to ₹17 for financial transactions and from Rs 5 to Rs 6 for non-financial transactions in all centres, effective from August 1, 2021. 'Interchange fee' is paid by the card-issuing bank to ATM operator when a customer uses another bank's ATM. To compensate for this hike, banks can now increase customer charges on transactions beyond the free limit from ₹20 to ₹21 from January 1, 2022. 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.
How will a hike in interchange fee affect customers?
The card issuing bank pays an interchange fee to the operator of the ATM when a customer makes a transaction at an ATM that does not belong to the card-issuing bank. Currently, the card-issuing bank pays an interchange fee of Rs 15 for each cash transaction and Rs 5 for each non-cash transaction.
The ATM operators had been pushing for a hike in interchange for some time now but banks were not on the same page on the issue. So, after this hike, using other banks’ ATMs beyond the free limit will be costlier now for the customers.
The changes announced on Thursday are based on the recommendations of a committee set up in June 2019 under the Chairmanship of the Chief Executive, Indian Banks’ Association to review the entire gamut of ATM charges and fees, with a particular focus on the interchange structure for ATM transactions.
The Reserve Bank of India in its latest order has also said that 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," the RBI order mentioned.
How will a hike in interchange fee affect customers?
The card issuing bank pays an interchange fee to the operator of the ATM when a customer makes a transaction at an ATM that does not belong to the card-issuing bank. Currently, the card-issuing bank pays an interchange fee of Rs 15 for each cash transaction and Rs 5 for each non-cash transaction.
The ATM operators had been pushing for a hike in interchange for some time now but banks were not on the same page on the issue. So, after this hike, using other banks’ ATMs beyond the free limit will be costlier now for the customers.
The changes announced on Thursday are based on the recommendations of a committee set up in June 2019 under the Chairmanship of the Chief Executive, Indian Banks’ Association to review the entire gamut of ATM charges and fees, with a particular focus on the interchange structure for ATM transactions.
The Reserve Bank of India in its latest order has also said that 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," the RBI order mentioned.
