Banking Update: ATM Interchange Fees to Rise from May 1, 2025

From May 1, 2025, withdrawing cash from ATMs will become a bit more expensive. The Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) have approved a Rs.2 increase in the interchange fee for ATM withdrawals. This change may slightly impact frequent ATM users.

The fee that banks pay each other when their customers use the ATMs of other banks will go up by Rs.2 per transaction. As a result, if customers exceed the free ATM usage limit set by their bank, they might have to pay slightly higher charges.

The decision to change the interchange fee is expected to help ATM operators and banks cover the costs of running and maintaining ATMs, especially in rural and remote areas. The increasing expenses for maintenance, security, and upgrades have made this adjustment necessary.

How will this affect ATM users?

While a Rs.2 increase per transaction may seem small, it can add up for people who often use other banks’ ATMs after using up their free transactions. In India, most banks allow a limited number of free ATM transactions each month, both at their own ATMs and those of other banks.

Important points of the Revised Interchange Fee

Bank customers should know their bank’s rules about free ATM transactions and the charges that apply after the limit is crossed. To avoid extra fees, they can carefully schedule their withdrawals by using their own bank or those in the free transaction network to prevent additional fees.

More information and rules regarding the updated interchange charge structure will shortly be made available by the RBI and NPCI. Banks will also inform their customers about these changes through different platforms.

Important Points:

• Section 269ST applies to the person receiving the cash, not the one paying it.
• If a person breaks this regulation, he shall be liable for a fine that is 100% of the amount of money received.
• The provision applies to the entire amount received from one individual within a day, whether by various transactions or otherwise.

It also applies if:

• A single transaction exceeds Rs. 2 lakh.
• Multiple transactions related to one event or occasion cross the Rs. 2 lakh limit from one person.

Exemptions:

• Government Receipts: The money received from the government is exempt.
• Banking Institutions: Money from banks, post office savings banks, or cooperative banks is not included.
• Loans and Deposits: Any transactions related to loans or deposits under Section 269SS are not included.
• Government Notifications: Exceptions may be elsewhere if the government issues a notification.