The Reserve Bank of India (RBI) has raised interchange fees on ATM withdrawal, which will make it more costly to withdraw cash from ATMs in India starting May 1, 2025. Customers who frequently use ATMs will be affected by this change, which will increase the cost of withdrawals, as per a Doordarshan (DD) news report.
What is an ATM interchange fee?
An ATM interchange fee is a charge that one bank pays to another for offering ATM services to customers. Banks often pass on these charges to users as part of their banking costs. For instance, if you are an HDFC Bank customer and go to SBI ATM to withdraw money and reside in Delhi, HDFC Bank will charge you if you on the fourth transaction in a month at an SBI ATM as an HDFC Bank customer.
Also read: 7 days left to get 7.5% interest for two years: Know how much to invest, last date, other key details of this government schemeThe RBI has revised these fees after white-label ATM operators requested an increase in ATM withdrawal charges, citing rising operational costs affecting their business, as per a DD news report.
How much more will customers pay?
As per DD news, from May 1, 2025, customers will face higher charges for ATM transactions beyond the free limit:
Financial Transactions (Cash Withdrawals): Rs 19 per transaction (up from Rs 17)
Non-Financial Transactions (Balance Inquiry, Mini Statement, etc.): Rs 7 per transaction (up from Rs 6).
The price hike is expected to affect customers of smaller banks the most, as these banks depend on larger financial institutions for ATM infrastructure and services.The government continues to promote digital banking as the preferred mode of financial transactions, further reducing dependence on cash-based payments. With the RBI set to increase ATM withdrawal charges from May 1, 2025, digital banking is becoming a more cost-effective and convenient alternative. Digital banking allows users to make transactions anytime, anywhere, eliminating the need for physical visits to banks or ATMs. The rise in ATM withdrawal charges makes digital payments a cheaper option for customers. With UPI, mobile banking, Whatsapp banking and internet banking becoming mainstream, the government aims to reduce dependency on cash transactions.
How many free transactions are allowed as per RBI?
As per an RBI circular dated October 10, 2014, the number of free transactions in a month for other bank ATMs has been reduced from five to three (including both financial and non-financial transactions). However, three free ATM transactions are applicable for ATMs at metro locations. This includes Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad. However, free ATM transactions at other banks remain five at other locations except those mentioned above.
Can ATM charges be levied on failed transactions?
ATM transactions fail several times due to technical failure. And this leads to confusion among bank customers who are confused if the failed ATM transactions will be counted as part of the free transactions.
The RBI, in its circular dated August 14, 2019, has clarified that transactions which fail on account of technical reasons like hardware, software, communication issues; non-availability of currency notes in the ATM; and other declines ascribable directly / wholly to the bank / service provider; invalid PIN / validations; etc., shall not be counted as valid ATM transactions for the customer. Consequently, no charges shall be levied.
The circular further clarified that non-cash withdrawal transactions (such as balance enquiry, cheque book request, payment of taxes, funds transfer, etc.), which constitute ‘on-us’ transactions (i.e., when a card is used at an ATM of the bank which has issued the card) shall also not be part of the number of free ATM transactions.
