After the free limit on ATM, transactions are going to become expensive. Reserve Bank of India (RBI) has increased the interchange fee. This will harm those who use ATM a lot.
From May 1, ATM transactions will become expensive after the free limit. Reserve Bank of India (RBI) has increased the interchange fee. This change will cost people who use ATM more. According to the report, after the free limit, now 2 rupees more will have to be paid for every transaction. Non-transaction fees have also increased by Rs. This means that now withdrawing money from ATM will cost 19 rupees. Earlier it used to cost 17 rupees. Checking account balance will now cost 7 rupees. Earlier it used to cost 6 rupees.
What is interchange fee?
ATM interchange fee is a charge that a bank levies from another bank for providing ATM services to its customers. But banks often pass on this cost to their customers. For example, if you live in Delhi or Mumbai. You are a customer of HDFC Bank and withdraw money from SBI ATM, then HDFC Bank can charge you after the third transaction.
How much are the free transactions?
According to a circular of Reserve Bank dated October 10, 2014, the number of free transactions in a month on ATMs of other banks has been reduced from 5 to 3 (both financial and non-financial). There are three free ATM transactions in metro cities (Mumbai, New Delhi, Chennai, Kolkata, Bengaluru and Hyderabad). Apart from these metro cities, there are five free transactions on ATMs of other banks at other places.
What if the transaction fails?
Many times transactions fail due to technical problems in ATMs. This creates confusion among customers whether failed transactions will also be counted in free transactions. The Reserve Bank has clarified in its circular dated August 14, 2019 that if a transaction fails due to technical problems (hardware, software communication problems, no money in ATM, bank service provider's mistake, wrong PIN, etc.), then it will not be considered a valid transaction. There will be no charge on this.
Limit of free transactions
It has also been clarified in this circular that non-cash withdrawal transactions (such as balance inquiry, asking for a check book, tax payment, fund transfer, etc.) which are 'onus' transactions (i.e. when the card of the same bank is used at the ATM of another bank), will not be counted in free ATM transactions.
How much will have to be paid?
After the cash withdrawal free limit, every transaction will cost Rs 19. Earlier it used to cost Rs 17. Balance enquiry, mini statement, etc. will cost Rs 7. Earlier it used to cost Rs 6.
Who will be troubled?
This increased price will trouble the customers of small banks more. Because small banks depend on big banks for ATMs. People who use ATMs more will find this change costly. After the free limit, people will now have to pay Rs 2 more on every transaction.
Reason for the decision?
The government is promoting digital payments so that dependence on cash is reduced. With the increase in ATM charges, digital payments will become an even more affordable option.