Starting May 1, Indian consumers will face higher ATM withdrawal costs as the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) have sanctioned a ₹2 increase in ATM interchange fees. The revision aims to ensure the financial sustainability of ATM operators while maintaining a reliable banking infrastructure.
What Are Interchange Fees?
Interchange fees are the charges paid by a card-issuing bank to the ATM-operating bank when a customer uses an ATM that does not belong to their bank. This fee plays a crucial role in supporting ATM operators, especially white-label ATM providers, by covering maintenance and operational costs.
Details of the Fee Hike
The revised interchange fee for domestic financial transactions will increase to ₹19, while non-financial transactions like balance inquiries will now incur a fee of ₹7. These adjustments were approved by the National Financial Switch Steering Committee on March 6, 2024, with the implementation date set for May 1. Additionally, GST will be applicable to these fees.
Impact on Customers
Despite the fee hike, customers in metro cities like Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, and New Delhi will continue to benefit from free ATM transactions. Account holders can make five free transactions per month at their bank’s ATMs and three free transactions at other banks’ ATMs. For non-metro cities, up to five free ATM transactions are permitted.
While the fee adjustment primarily impacts banks, customers could face increased charges beyond their free transaction limits. Banks may choose to pass on the higher interchange fees to consumers in the form of increased withdrawal fees.
Industry Response and Future Outlook
According to Anush Raghavan, President of Cash Management Solution at CMS Info Systems, the fee hike provides necessary financial support to banks and white-label ATM operators. This move is expected to encourage further investments in ATM networks, enhancing accessibility, especially in underserved regions.
Industry stakeholders had previously suggested raising the interchange fee to ₹23 for improved financial viability. The last fee increase occurred in 2021, raising the fee from ₹15 to ₹17, alongside a maximum customer transaction fee hike from ₹20 to ₹21.
Decline in ATM Usage
Despite the fee increase, ATM withdrawals have shown a declining trend. RBI data indicates that cash withdrawals dropped from 57 crore transactions in January 2023 to 48.83 crore in January 2025. However, cash remains a significant part of India’s financial ecosystem.
As banks expand their ATM networks, the revised interchange fee could support a more sustainable operating model, ensuring better financial services for customers across the country.
