Starting May 1, withdrawing money from ATMs in India will become more expensive. The Reserve Bank of India (RBI) has approved a fee increase for ATM transactions.
Customers who use ATMs will now face additional charges once they exceed their free transaction limit. The interchange fee is a charge one bank pays to another for providing ATM services, and this cost is often passed on to customers.
The RBI decided to raise these fees after white-label ATM operators requested the change, saying rising costs were affecting their business.
The fee hike will be applied nationwide, especially affecting customers of smaller banks. These banks rely on larger banks for ATM services, making them more vulnerable to the increased costs.
From May 1, customers will pay an extra Rs 2 for each financial transaction beyond their free limit. For non-financial transactions like balance inquiries, the fee will rise by Rs 1. So, withdrawing money from an ATM will now cost Rs 19, up from Rs 17. Checking account balances will cost Rs 7 per transaction.
ATMs, which were once a breakthrough in banking, have faced competition from digital payments like UPI and online wallets. As digital payments grow in India, the need for cash withdrawals has decreased.
According to government data, digital payments in India grew from Rs 952 lakh crore in FY14 to Rs 3,658 lakh crore by FY23. With this fee increase, customers who still rely on cash may find it more expensive, pushing them further toward digital payments.