Your ATM Withdrawals May Soon Cost More — RBI Hikes Interchange Fees

Mumbai: The Reserve Bank of India (RBI) has approved a hike in ATM interchange fees, effective from May 1, 2025, increasing financial transaction charges by ₹2 and non-financial transaction charges by ₹1.

This move is expected to particularly strain smaller banks with limited ATM networks, raising concerns about its impact on customers.

The new charges will see financial transaction fees rise from ₹17 to ₹19, while non-financial transactions, like balance inquiries, will go up from ₹6 to ₹7. The last revision of these fees was in June 2021.

Also Read: Market Outlook: Key Triggers for Next Week – PMI, FIIs, and Global Economic Data

Customers May See Higher ATM Charges

While banks have not officially decided whether the additional costs will be passed on, industry experts believe that customers will eventually bear the burden. A senior bank official told The Financial Express, “Whenever interchange fees were revised over the past 10 years, banks always passed the changes on to customers. This time will be no different.”

Interchange fees refer to the amount a customer’s bank pays to another bank when its ATM is used. These fees are typically recovered through customer service charges.

Smaller Banks Face Bigger Challenges

According to sources, the National Payments Corporation of India (NPCI) informed banks about the revised structure on March 13, following pressure from white-label ATM operators who found it difficult to sustain operations under the earlier fee system.

Smaller banks, which rely more on other banks’ ATM networks, will face significantly higher payouts under the new fee structure. A senior official from a mid-sized private bank noted, “The additional payout from small banks to other banks due to the increased interchange fees is likely to be significant.”

These banks now face a difficult choice: pass on the cost and risk upsetting customers, or absorb it and hurt their bottom line.

Currently, customers in metro cities are allowed five free ATM transactions per month at non-home bank ATMs, while those in non-metro areas get three. Any additional transactions beyond this limit will attract the revised charges starting May next year.