Fees for ATM cash withdrawals, debit cards and credit cards are all set to rise soon

The Reserve Bank of India (RBI) has approved a fee of Rs 21 per transaction on automated teller machines (ATMs) by banks.

Once clients have used all their free ATM withdrawals, lenders can charge them fees up to this amount.

The new rate will take effect on January 1, 2022, according to the central bank's announcement.

After nearly seven years, the regulator has increased ATM transaction fees. A RBI notification read as, “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. "

Customers can use their own bank ATMs for up to five free transactions every month. Both financial and non-financial transactions are included. They must pay an additional Rs 20 for each ATM transaction if they exceed the limit. Customers who withdraw cash from other banks' ATMs are entitled to three free ATM transactions in metro cities and five in non-metro areas.

The central bank has decided to raise ATM transaction fees in response to rising costs of ATM deployment and maintenance faced by banks and white label ATM operators. RBI formed a committee in June 2019 to look into the full range of ATM charges and fees, with a special focus on the interchange structure for ATM transactions.

In order to balance stakeholder expectations and customer convenience, the RBI has increased the interchange charge for financial transactions to Rs 17 from Rs 15 and for non-financial transactions to Rs 6 from Rs 5. From August 1st, 2021, the new rates will be in effect. The cost charged by banks to the merchant who processes a credit or debit card payment is known as an interchange fee.

RBI notification stated, “Applicable taxes, if any, shall be additionally payable."

The instructions will also apply to transactions, other than for cash deposit transactions made at Cash Recycler Machines. According to the regulator, the RBI order was issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).