ATM Withdrawal Fees Set to Rise in India
The Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) have announced a ₹2 increase in ATM interchange fees for cash withdrawals, effective May 1. This adjustment aims to ensure the sustainability of ATM operations, impacting customer banking costs. Currently, account holders in major cities can make a limited number of free transactions at their bank’s ATMs and at other banks’ machines.
New Fee Structure Explained
The recent decision to raise ATM interchange fees was endorsed by the National Financial Switch Steering Committee on March 6, 2024. The new fee structure will set domestic financial transactions at ₹19 and non-financial transactions at ₹7. This increase is expected to affect customers, although banks currently absorb the costs of free transactions. As of January 2025, India had 216,706 ATMs in operation, according to RBI statistics. NPCI communicated the updated fee structure to its member banks on March 13, and the implementation date has now been made public. The revised fees will also be subject to additional Goods and Services Tax (GST). The RBI has indicated that the ATM network can independently determine the interchange fee, allowing for flexibility in future adjustments.
Implications for Customers and Banks
The fee hike is designed to support banks and white-label ATM (WLA) operators, enabling them to maintain and improve ATM infrastructure. Anush Raghavan, president of Cash Management Solution at CMS Info Systems, stated that this adjustment will encourage banks to invest in expanding their ATM networks, enhancing accessibility for customers across the country. Despite the fee increase, ATM usage has been declining. RBI data shows a drop in cash withdrawals from over 57 crore transactions in January 2023 to 48.83 crore in January 2025. Nevertheless, cash transactions remain vital in India’s economy. The previous increase in interchange fees in 2021 contributed to the growth of the ATM network, with monthly withdrawals averaging ₹1.43 crore during FY24, reflecting a 5.51% annual increase.
Future of ATM Transactions
The revised interchange fees will not apply to Micro-ATMs, interoperable cash deposits, or international ATM transactions. NPCI has also specified a ₹7 interchange fee for balance inquiries in Nepal and Bhutan, excluding GST, while maintaining existing cash withdrawal rates.
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