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RBI allows ATM operators an increase in the ‘interchange’ fees for the Credit/Debit card

RBI allows ATM operators an increase in the ‘interchange’ fees for the Credit/Debit card

June 11, 2021:The Reserve Bank of India (RBI) has allowed ATM Automated Teller Machine) operators an increase in the ‘interchange’ fees for the Credit/Debit card-issuing banks which allow the card members to use the ATMs of other banks than their ‘home’ banks.

The interchange fees for financial transactions have been increased from Rs.15 to Rs.17 and for non-financial transactions from Re.5, (five) to Rs.6 (six). The new charges will come into effect from August 1, 2021, said an RBI Press Release.

The increase in the interchange fee structure for ATM transactions after almost 9 years. The revision in the fees has been made considering the increasing cost of ATs deployment and expenses towards ATM maintenance incurred by the banks and white label ATM operators.

The card issuing bank pays an interchange fee to the operator of the ATM when a customer makes a transaction at an ATM that does not belong to the card-issuing bank. Currently, the card-issuing bank pays an interchange fee of Rs 15 for each cash transaction and Rs 5 for each non-cash transaction.

The ATM operators had been asking for a hike in interchange for some time now but banks were not on the same page on the issue as, ultimately, the extra cost would have to be borne by the customers.

The RBI had, back in June 2019, constituted a committee to review the entire gamut of ATM charges and fees with a particular focus on interchange structure for ATM transactions.

“The recommendations of the committee have been comprehensively examined. 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,” the RBI Said revising the interchange fees for ATM transactions.

RBI also said that customers will be eligible for five free transactions, which includes financial and non-financial transactions, every month from their own bank ATMs. And they will be eligible for three free transactions (both financial and non-financial) from other banks’ ATMs in metro cities. In non-metro centers, customers will be able to do five transactions (financial and non-financial) from other bank ATMs.

Beyond the prescribed number of free transactions that a customer is eligible to do from other bank ATMs’, currently, they are charged Rs 20 per transaction. But RBI has now hiked this interchange fee from Rs 20 to Rs 21 per transaction, effective January 1, 2022.

 

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