ATM Charges Set to Rise: RBI, NPCI Approve Rs. 2 Hike in Interchange Fee from May 1, 2025
RBI and NPCI approve Rs. 2 hike in ATM interchange fee for cash withdrawals, effective May 1, 2025. This may potentially raise post-limit ATM usage costs for customers
The Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) have approved a hike in ATM interchange fees, the charges banks pay each other when a customer uses an ATM of a different bank. Starting May 1, 2025, this fee for cash withdrawal will increase from Rs. 17 to Rs. 19, and the fee for non-financial transactions like balance enquiries will rise to Rs. 7,...
The Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) have approved a hike in ATM interchange fees, the charges banks pay each other when a customer uses an ATM of a different bank. Starting May 1, 2025, this fee for cash withdrawal will increase from Rs. 17 to Rs. 19, and the fee for non-financial transactions like balance enquiries will rise to Rs. 7, excluding GST.
What is the ATM Interchange Fee?
When you use an ATM that doesn't belong to your bank. For example, if your bank is HDFC and you withdraw money from an SBI ATM, your bank pays a fee to SBI for using their machine. This fee is called the interchange fee, and it is separate from the charge the bank may pass on to you if you exceed your free ATM limits.
This fee is not usually visible to customers directly, but often becomes a factor in what they get charged after they exhaust their free monthly ATM usage limits — 5 free transactions in metro cities and 3 in non-metro cities, across other banks' ATMs.
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Who Will Be Affected?
The hike mainly affects banks and ATM operators, but it may also lead to higher ATM charges for customers who:
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- Use other banks' ATMs frequently,
- Withdraw cash or check balances beyond the free transaction limit.
Banks may decide to pass on the increased cost to customers, especially after the free limits are used up.
What’s Not Changing?
According to NPCI’s circular dated March 13, 2025, the revised fees will not apply to:
- Micro-ATM transactions (used mostly in rural areas for basic banking),
- Interoperable cash deposits (deposits made through UPI or debit cards at other bank ATMs),
- International ATM transactions (foreign card usage in India and Indian cards abroad).
For Nepal and Bhutan, the interchange fee for balance enquiries has also been fixed at Rs. 7, excluding GST.
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The hike comes after requests by ATM operators and banks, who have been citing rising operational costs, such as:
- Increased prices of cash handling and transportation,
- Maintenance of machines,
- Higher rent and electricity bills,
- Inflation and increased security requirements.
According to the NPCI letter, the RBI has allowed NPCI to determine these fees, and the new rates will be effective from May 1, 2025.
Current Status of the ATM Network in India
NFS (National Financial Switch) is the network used for ATM transactions across India, managed by NPCI. As of February 2025, there are 1,349 NFS member banks, up from 1,296 the year before. However, ATM transaction volumes have dropped. 315 million transactions were recorded in February 2025 — a 13.7% decline from 365 million in February 2024. The total number of ATMs in the NFS network has remained steady at 2.65 lakh (265,000).
So, from May 1, 2025, if you use an ATM from another bank after using up your free monthly limit, your bank may start charging you a higher fee, possibly reflecting this Rs. 2 increase. A separate GST will also be added to the fee.
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