Cash Withdrawals From ATMs To Get Costlier From May 1

The move implies that customers who go beyond their free transaction limits will be charged extra.
Cash Withdrawals From ATMs To Get Costlier From May 1
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NEW DELHI: Withdrawing cash from ATMs in India will cost more from May 1 as the Reserve Bank of India (RBI) has raised interchange fees. The move implies that customers who go beyond their free transaction limits will be charged extra.

An interchange fee is the amount one bank pays to another for ATM services, typically levied on customers as part of their banking charges. RBI's move to review such fees has been prompted by an appeal from white-label ATM operators, who claimed increased operational expenses as a danger to their business sustainability.

The country-wide fee hike is likely to hit the customers of small banks harder, which usually rely on big banks for ATM infrastructure and services. From May 1, customers will have to pay an exra Rs 2 for every financial transaction above the free limit. Consequently, the cost of withdrawing cash will rise to Rs 19 per transaction, up from the previous Rs 17. For non-financial transactions, such as balance inquiries, the fee will increase by Rs 1, bringing the total to Rs 7 per transaction.

Despite the convenience that was offered by ATMs earlier, their usage is decreasing in India because of increased usage of digital payment modes. Government data indicates that digital payments increased from Rs 952 lakh crore in FY14 to Rs 3,658 lakh crore in FY23, reflecting dramatically increased cashless payments. The new fee increase could further make customers switch over to digital alternatives.

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