RBI raised ATM interchange fees by Rs 2 for financial transactions (like cash withdrawals) and Rs 1 for non-financial transactions (like balance inquiries). This change will be effective from May 1, 2025. A senior bank official said that whenever the interchange fees have been increased in the last 10 years, the additional charges are borne by the customer, so this time too bank will pass the costs to customers.
As per sources, the interchange fees have been increased because of the White-label ATM operators (ATMs, not owned by banks), who were struggling with the current fee structure. RBI agreed to increase this fees after a suggestion from the National Payments Corporation of India (NPCI). White-label ATM operators argued that the old fee structure was not enough to cover the operational costs of the running ATM services.
This change will affect smaller banks more because they have fewer ATMs, making it harder for them to absorb the extra costs. Small banks have to pay more to the other banks when their customers use ATMs outside their network. If these banks transfer the fee increase to customers it could lead to frustration among customers and if bank absorb the additional cost, their profit may decrease.
The last change in the interchange fees structure was done in June 2021.
Explanation of some financial terms used here:
What is Interchange Fees in banks?
:
A interchange fees is charged when a customer uses an ATM of a bank other than their own. The customer bank pays a fee to the bank that owns the ATM. The revised interchange fee for financial transactions is increaesed from RS 17 to Rs 19 and for non-financial transactions fee is increased from Rs 6 to Rs 7.
What are White-label ATM operators?
White-label ATM operators are non-bank entities approved by the RBI to set up and run ATMs. Their aim is to make more ATMs available, especially in semi-urban and rural areas. Customers of any banks can use these White-label ATMs and can get similar services like traditional ATMs.
At present there are five white-label ATM operators:
– Tata Communications Payment Solutions
– Hitachi Payment Services
– India1 Payments
– Vakranjee
– Electronic payment and services
