The service charges per transaction for Automated Teller Machines (ATM) across banks have increased to Rs 21 from Rs 20 starting Saturday after the Reserve Bank of India(RBI) issued an order stating that customers will have to pay Rs 1 more beyond the permissible free transactions for cash as well non-cash purposes.
The RBI, in its order dated June 10, 2021, had said that from January 1, 2022, banks are allowed to levy Rs 21, Re 1 more than the previous charge of Rs 20, with applicable taxes, if any, shall be additionally payable.
“Customers are eligible for five free transactions (inclusive of financial and non-financial transactions) every month from their own bank ATMs. They are also eligible for free transactions (inclusive of financial and non-financial transactions) from other bank ATMs viz. three transactions in metro centres and five transactions in non-metro centres. Beyond the free transactions, the ceiling/cap on customer charges is Rs 20 per transaction, as prescribed vide circular DPSS.CO.PD.No.316/02.10.002/2014-2015 dated August 14, 2014. 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. Applicable taxes, if any, shall be additionally payable,” stated the notification.
All banks provide their customers with five free transactions, including financial and non-financial transactions, provided they are done from their own bank ATMs.
Besides, customers also get free transactions from ATMs of other banks depending on their place of residence. For instance, people living in metro centres get three free transactions from other bank ATMs while those residing in non-metro centres get 5 free transactions.
In a nutshell, customers who transact at other banks’ ATMs after exhausting their free ATM transactions will have to pay Rs 21 and additional GST charges for using the services.
ATM service charges revised after over 7 years
The change in service fee from Rs 20 to Rs 21 has come after over 7 years. The last revision in service charges on ATM transactions was made in August 2014 while a change in interchange fee structure for ATM transactions was made over 9 years ago, in August 2012.
Last year, the RBI issued a circular, notifying about the changes made in the ATM service charges starting January 1, 2022. The central bank had cited the increasing cost of ATM deployment and expenses towards ATM maintenance incurred by banks or white-label ATM operators to justify the hike.
As per Ashwani Rana, the founder of Voice of Banking, who spoke to ANI, said the hike is very nominal as compared to ATM charges the banks have to bear. “The increase of service charges per ATM transaction will be charged from the customers beyond a number of transactions permitted by the respective banks. This increase is only Rs 1 plus Goods and Services Tax (GST), which is very nominal to customers against the maintenance charges paid by banks as earlier they were charging Rs 20,” Rana said.
The CEO of RapiPay Fintech, Nipun Jain, clarified that customers withdrawing cash using Micro ATMs and Aadhaar Enabled Payment System(AEPS) won’t be affected by RBI’s latest guideline to increase ATM service charges.
“We believe this will boost the already growing demand for cash withdrawal through AEPS and Micro ATMs at our direct business outlets and help us in achieving our goal of growing financial inclusion in deeper geographies and far-flung areas like North East, Kashmir, Ladakh, and Uttrakhand. We have sold over one lakh Micro ATMs since we began operations last year. Our average ticket size of withdrawal has climbed from Rs 3500 to Rs 3800, with a CAGR growth of 25 per cent in Micro ATMs in the last one year,” Jain said.
