Cash Withdrawals From ATMs Set to Become More Expensive?

The cost of cash withdrawals from ATMs is expected to rise as the Reserve Bank of India (RBI) has approved an increase in the ATM interchange fee by ₹2 for financial transactions and ₹1 for non-financial transactions. The hike will take effect from May 1, 2025.

What is the ATM Interchange Fee and Why Is the RBI Raising It?

The ATM interchange fee is the charge one bank pays to another for allowing its customers to use their ATMs for transactions. If banks pass the increased interchange fees onto customers, the cost per transaction across India will rise to ₹19, up from ₹17. The fee for balance inquiries will also increase from ₹6 to ₹7.

These fees will apply once users exceed their free monthly limits—five transactions in metro cities and three in non-metro areas at ATMs of other banks.

According to reports, the National Payments Corporation of India (NPCI) consulted with industry stakeholders and recommended the increase in the ATM interchange fee—from ₹17 to ₹19 for cash transactions and from ₹6 to ₹7 for non-cash transactions.

White-label ATM operators have been pushing for a hike in the interchange fee, while smaller banks are expected to feel the pressure more, as they rely heavily on other banks' ATM networks due to their limited infrastructure.

The RBI introduced White Label ATMs under the Payment and Settlement Systems Act of 2007 to promote financial inclusion and expand ATM networks in rural and semi-urban areas. These ATMs are operated by non-banking entities.

White-label ATM operators argue that the old fee structure was unsustainable given the rising operational costs.

With the expected surge in the ATM interchange fee, more customers are likely to either withdraw cash from their own banks' ATMs or switch to digital payments.