Beginning January 1, unauthorized ATM transactions will cost extra

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Using ATMs for cash and non-cash purposes outside of the permitted free transactions will cost extra starting on Saturday.

According to a Reserve Bank decision issued in June, banking users will be required to pay Rs 21 per transaction beginning January 1, 2022 for transactions that exceed the free permissible limit. At the moment, banks are permitted to charge Rs 20 for such ATM transactions.

Customers would still be entitled to five free transactions each month at their own bank’s ATMs (including both financial and non-financial transactions). They’d also get three free transactions at other bank ATMs in metro areas and five free transactions in non-metro areas.

With effect from August 1, 2021, the RBI has already approved banks to raise interchange fees per transaction in all locations from Rs 15 to Rs 17 for financial transactions and non-financial transactions cost between Rs 5 and Rs 6.

The fees have been raised to reflect the rising cost of ATM deployment and ATM maintenance expenses borne by banks/white label ATM operators, as well as the need to balance stakeholder expectations and user convenience.

It’s worth noting that the central bank established a committee in June 2019 under the chairmanship of the Indian Banks’ Association’s Chief Executive to review the full range of Automated Teller Machine (ATM) charges and fees, with a special focus on interchange structure for ATM transactions.

There were 1,15,605 onsite ATMs and 97,970 off-site automated teller machines on March 31, 2021.At the end of March 2021, almost 90 crore debit cards issued by various banks were still active.

In 1987, HSBC launched India’s first ATM in Mumbai. During the next twelve years, almost 1,500 ATMs were built across India. Swadhan, the first network of shared ATMs that allowed interoperable transactions, was introduced by the Indian Banks’ Association (IBA) in 1997.

“To compensate the banks for the higher interchange fee and considering the general rise in costs, they are authorised to increase the consumer charges to Rs 21 per transaction,” the RBI said in a circular issued earlier. This raise will take effect on January 1, 2022.”

Aside from that, the central bank permitted banks to raise interchange fees per transaction in all locations from Rs 15 to Rs 17 for financial transactions and from Rs 5 to Rs 6 for non-financial transactions. This took effect on August 1, 2021.

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