ATM rules 2021: Cash withdrawal, transaction charges

 

ATM rules 2021: Cash withdrawal, transaction charges

The Reserve Bank of India had recently announced a couple of changes in the ATM rules. While these rules are in line with the long pressing demands by the payment services, banks and white label ATM operators for customers it also means a little more burden on their pocket.

Here are 5 big rule changes related to ATM card you must know

1. Effective August 1, 2021, banks are allowed to increase interchange fee per transaction from Rs 15 to Rs 17 for financial transactions and from Rs 5 to Rs 6 for non-financial transactions in all centres, the circular said. ATMs are deployed by banks for serving their own customers and also provide services to other banks' customers as acquirers where they earn interchange income.

2.  RBI has now permitted banks to increase charges for cash and non-cash ATM transactions beyond free monthly permissible limit from next year. "To compensate the banks for the higher interchange fee and given the general escalation in costs, they are allowed to increase the customer charges to Rs 21 per transaction. This increase shall be effective from January 1, 2022," the RBI said in a circular.

3. Bank customers will have to pay Rs 21 per transaction, instead of Rs 20, with effect from January 1, 2022, if they exceed the monthly limit of free transactions.

4. Customers are eligible for five free transactions (inclusive of financial and non-financial transactions) every month from their own bank ATMs.

Automated Teller Machines (ATMs) across banks are all set to undergo a change from August 1, following an order from the Reserve Bank of India (RBI). From today, the interchange fee that banks charge after each transaction on the ATM machine will go up from today.

What is an interchange fee?

 

The interchange fee is charged by banks to merchants processing payments through credit cards or debit cards.

Starting August 1, the interchange fee that banks can charge on Automated Teller Machines (ATM) will see an increase of ₹2 following the Reserve Bank of India (RBI) order. In June, the central bank raised the interchange fee from ₹15 to ₹17, while for non-financial transactions the fee has been raised from ₹5 to ₹6.

Why were charges for ATM cash withdrawals hiked?

The central bank had said these charges were allowed to be hiked owing to the increasing cost of ATM deployment and expenses towards the maintenance of ATM that banks incur.

The changes were announced on the basis of the suggestions of a committee set up by the RBI in June 2019. It was set up under the chairmanship of the chief executive of the Indian Banks’ Association to review the entire gamut of ATM charges and fees with a particular focus on interchange structure for ATM transactions.

As per the revised rules, the customers will be eligible for five free transactions every month from their home bank ATMs. Customers can claim free transactions from ATMs of other banks, too, which include three withdrawals in metros and five in non-metro cities.

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