Debit Card, Credit Card maintenance, ATM withdrawal becomes costlier

Starting from today, you have to pay more for withdrawing cash from automated teller machines (ATMs). The banks are set to increase the interchange fee structure for ATM transactions. The Reserve Bank of India (RBI) has allowed the banks to hike the interchange fee, effective from August 1, 2021. Considering rising cost of deployment of ATMs and maintenance, RBI has raised interchange fee to ₹17 from ₹15 for financial transactions and ₹6 to Rs 5 for non-financial transactions.

“Applicable taxes, if any, shall be additionally payable,” RBI said. The new rates shall also apply, mutatis mutandis, to transactions done at Cash Recycler Machines (other than for cash deposit transactions), the regulator added.

Interchange fees are transaction fees that the merchant’s bank account must pay whenever a customer uses a credit/debit card. The card-issuing bank pays an interchange fee to the operator of the ATM when an user makes a transaction at an ATM that does not belong to that bank. Earlier, the bank paid an interchange fee of Rs 15 for each cash transaction and Rs 5 for each non-cash transaction.

In the view of increasing cost of ATM deployment and maintenance charges incurred by banks or white label ATM operators, the central bank has decided to raise the ATM transaction charges. In June 2019, RBI constituted a committee to review the entire gamut of ATM charges and fees with a particular focus on interchange structure for ATM transactions. The regulator has hiked the charges of ATM transactions after almost seven years. “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.

Customers are eligible for five free transactions every month from their own bank ATMs. This includes both financial and non-financial transactions. Beyond the limit, they have to pay an extra amount of Rs 20 for each ATM transaction. For customers using other bank ATMs for cash withdrawal are allowed three free ATM transactions in metro cities and five in non-metro centres. RBI has now risen this interchange fee from Rs 20 to Rs 21 per transaction, effective January 1, 2022.

From August, ICICI Bank customers will get the first 3 transactions (inclusive of financial and non-financial) in six metro locations including Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad in a month. In all other locations, the first five transactions will be free. Beyond the free limit, the bank will charge ₹20 per financial transaction and ₹8.50 per non-financial transaction from next month. The new charges will be applicable for Silver, Gold, Magnum, Titanium and Wealth cardholders.

State Bank of India earlier raised charges for cash withdrawals from its ATMs and bank branches from July. The new charges are applicable for Basic Savings Bank Deposit (BSBD) account holders. For BSBD account holders, there are four free cash withdrawals available — including ATMs and bank branches every month. The bank now applies a fee of Rs 15 plus GST for every transaction beyond the free limit. The charges on cash withdrawal are applicable at home branch and ATMs and non-SBI ATMs.