Cash withdrawal from ATMs may get costlier
If the interchange fee is increased, withdrawing cash from ATMs could become expensive
According to CATMi ground realities were not considered before formulating the decision, and the officials were also surprised that there was no consultation with the industry players before the decision was announced.
New Delhi: The popularity of digital payments through UPI is rapidly increasing in the country. Despite this, there is still a demand for cash. According to the figures of cash logistics company CMS Infosystems, there has been a 5.51% increase in average monthly cash withdrawal from ATMs in the financial year 2023-24. The average cash withdrawal has increased from 1.35 crore rupees in FY23 to 1.43 crore rupees in FY24. If you also frequently use ATMs for cash, there is a bad news for you. Such customers may face a shock in the coming days because withdrawing money from ATMs could become expensive. Let’s find out why.
The Confederation of ATM Industry (CATMI), an organization of ATM operators, has demanded an increase in interchange fees. Increasing the interchange fee could make withdrawing cash from ATMs more expensive. For this, the organization has contacted the Reserve Bank of India and the National Payments Corporation of India (NPCI). The interchange fee is a charge that a person has to pay in exchange for withdrawing cash from an ATM. Therefore, if the interchange fee increases, you may have to pay more for cash withdrawal from ATMs.
Increased charges-
According to a report in The Economic Times, ATM manufacturer AGS Transact Technologies has said that CATMI has demanded an increase in interchange fees to a maximum of 23 rupees per transaction. Some other ATM manufacturers are demanding an increase in the charge to up to 23 rupees per transaction.
In 2021, the interchange fee increase raised the charge per transaction from 15 rupees to 17 rupees. Additionally, it raised the limit for charges levied on customers from 20 rupees to 21 rupees per transaction. ATM operators say that it took several years for the charge to be increased last time. This time, they expect a quick change.
Let’s understand what the interchange fee is-
Interchange fee payment is made from one bank to another bank. Suppose, you have an ICICI Bank ATM card, but you made a transaction using a Canara Bank ATM machine. In this case, Canara Bank will receive the payment of the interchange fee from ICICI Bank for your transaction. Ultimately, banks transfer the burden of this charge onto customers.
In six metro cities – Delhi, Mumbai, Kolkata, Chennai, Hyderabad, and Bengaluru – most banks usually offer their savings account holders a minimum of 5 free transactions per month. While the limit for free transactions at other banks’ ATMs is three. If there are more transactions than this, the customer is charged.
The limit for free cash-
The limit for free cash withdrawal and ATM Cash Withdrawal Charges may vary from bank to bank. One thing is certain that if the interchange fee increases, the burden will ultimately fall on the customers and they will have to pay more for withdrawing cash from ATMs. Currently, the ball is in the court of the RBI and NPCI.
Published: June 14, 2024, 15:20 IST