ATM Usage to Become Costlier from May 1 | Here’s What You Need to Know

New Delhi: Withdrawing cash from ATMs will become more expensive in India starting May 1, 2025, as the Reserve Bank of India (RBI) has increased interchange fees on ATM withdrawals, according to a Doordarshan (DD) news report. This move is expected to impact customers who frequently withdraw cash, as they will have to pay higher charges for ATM transactions beyond the free limit.

What Is an ATM Interchange Fee?

An ATM interchange fee is the charge that one bank pays to another when a customer uses an ATM that does not belong to their bank. Banks pass on these charges to customers as part of their banking fees.

For example, if an HDFC Bank customer withdraws money from an SBI ATM in Delhi, HDFC Bank will charge the customer if the transaction exceeds the free limit. This fee revision follows demands by white-label ATM operators, who sought an increase in withdrawal charges due to rising operational costs.

How Much More Will Customers Pay?

According to the DD news report, the revised charges will be effective from May 1, 2025. Customers will pay higher fees for ATM transactions exceeding the free limit:

• Financial Transactions (Cash Withdrawals): ₹19 per transaction (previously ₹17).
• Non-financial transactions (such as balance inquiry, and mini statement requests): ₹7 per transaction (previously ₹6).
• The fee hike is expected to impact customers of smaller banks the most, as these banks rely on larger financial institutions for ATM services.

Also Read: Facebook, Instagram Down Worldwide – Millions Hit

Government Push for Digital Banking

With the increase in ATM withdrawal charges, the government continues to promote digital banking as a cost-effective and convenient alternative to cash transactions.

Digital banking services such as UPI, mobile banking, WhatsApp banking, and internet banking have become mainstream, reducing dependence on ATMs. The RBI’s decision to hike withdrawal fees aligns with its efforts to encourage cashless transactions across India.

“Digital payments offer users the flexibility to transact anytime, anywhere, eliminating the need for physical bank visits. With higher ATM charges, customers are likely to opt for digital payments over cash transactions,” financial experts said.

How Many Free Transactions Are Allowed?

According to the RBI’s circular dated October 10, 2014, customers can make a limited number of free ATM transactions per month, depending on the location like in the metro Cities (Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Hyderabad). Customers can make three free transactions per month at other bank ATMs (including both financial and non-financial transactions).

Non-Metro Locations:

• Five free transactions per month at other bank ATMs.
• Beyond these limits, customers will be charged as per the revised fee structure.

Also Read: War Plans Leak Row: Mike Waltz's Position As US NSA Under Threat, Trump To Take Final Call

Are Charges Levied on Failed ATM Transactions?

Many customers face failed ATM transactions due to technical issues, leading to confusion over whether such transactions count toward the free limit.

The RBI clarified in its August 14, 2019, circular that failed transactions due to technical errors—such as hardware or software failures, network issues, or lack of cash in the ATM—will not be counted as valid ATM transactions.

“Transactions that fail due to invalid PINs or authentication errors will also not be charged,” the RBI stated.

Additionally, non-cash transactions (such as balance inquiries, cheque book requests, tax payments, or fund transfers) will not be counted as part of the free transaction limit when using an ATM of the same bank that issued the card.

Impact on Customers

The increase in ATM withdrawal charges may push more people toward digital transactions. With the rising adoption of UPI, mobile wallets, and online banking, cash transactions are gradually declining. However, customers who rely heavily on ATMs, especially in rural areas, may find this fee hike burdensome.

Banks are expected to issue notifications to inform customers about these changes before the new charges take effect on May 1, 2025.