ATM withdrawals, debit and credit card fees to increase from next month


Withdrawing cash from automated teller machines (ATM) may become more expensive in the coming days. The interchange fee structure for ATM transactions will be increased by the banks from next month. The Reserve Bank of India has approved an increase in the interchange fee, which will take effect on August 1, 2021. Because of the growing cost of ATM deployment and maintenance, the RBI has increased the interchange fee for financial transactions from Rs 15 to Rs 17 and for non-financial transactions from Rs 5 to Rs 6 . The RBI stated that “applicable taxes, if any, shall be charged in addition.”

The new rates shall also apply, mutatis mutandis, to transactions done at Cash Recycler Machines (other than for cash deposit transactions), the RBI added.

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When a customer uses a credit or debit card, the merchant’s bank account is required to pay transaction fees. When a user makes a transaction at an ATM that is not owned by that bank, the card-issuing bank pays an interchange fee to the ATM operator. Currently, the bank charges Rs 15 as an interchange fee for cash transactions and Rs 5 for non-cash transactions.

The central bank has decided to increase ATM transaction fees in response to rising costs of ATM deployment and maintenance borne by banks or white label ATM operators. RBI formed a committee in June 2019 to look into the entire array of ATM charges and fees, with a special focus on the interchange structure for ATM transactions. After nearly 7 years, the regulator has increased ATM transaction fees. “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,” RBI said in a notification.

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Customers can use their own bank ATMs for 5 free transactions each month. This includes both financial and non-financial transactions. If they exceed the limit, t hey must pay an additional Rs 20 for each ATM transaction. Customers who withdraw cash from other banks’ ATMs are entitled to 3 free ATM transactions in metro cities and 5 in non-metro areas. Effective January 1, 2022, the RBI has increased this interchange fee from Rs 20 to Rs 21 per transaction.

From August, ICICI Bank clients in Mumbai, New Delhi, Chennai, Kolkata, Bengaluru, and Hyderabad would receive the first 3 transactions (both financial and non-financial) in a month. The first 5 transactions will be free in all other places. From next month, if you exceed the free limit, the bank will charge you Rs 20 for financial transactions and Rs 8.50 for non-financial transactions. Silver, Gold, Magnum, Titanium, and Wealth cardholders will be subject to the new fees.

From July, the State Bank of India increased the fees for cash withdrawals from its ATMs and bank offices. Basic Savings Bank Deposit (BSBD) account holders will be liable to the increased fees. Every month, BSBD account users are entitled to four free cash withdrawals from ATMs and bank offices. Every transaction that exceeds the free limit now will incurs a fee of Rs 15 + GST. Cash withdrawal fees apply at non-SBI ATMs as well as at home branches and ATMs.

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