The rise in ATM interchange fees will boost expansion of ATM networks, encouraging banks and operators to increase their investments. White-label ATM operators and banks, which have seen their operating costs surge due to higher compliance expenses, say the fee hike will help offset these costs.
The revised fee structure will come into effect from May 1.
“The decision to hike ATM interchange fees will significantly benefit the banking sector by encouraging greater deployment of ATMs, particularly in rural areas where a substantial unbanked population still exists,” said a senior official of a leading ATM services provider. “With this increase, the business case for expanding ATM networks in these regions has become much stronger.”
The hike was long overdue, as operational costs have risen over the past few years due to multiple factors, he added. One of the key drivers of this increase is the growing cost of regulatory compliance.
The interchange fee for financial transactions, such as cash withdrawals, has been increased to Rs 19 from Rs 17, while for non-financial transactions such as balance inquiries, the fee has been raised from Rs 6 to Rs 7.
“The previous hike in interchange fees from Rs 15 to Rs 17 in 2021 led to an expansion of the ATM network, reflecting the industry’s commitment to meeting the cash needs of the populace,” said Anush Raghavan, president, cash management solution, CMS Info Systems. “We anticipate that the current fee adjustment will further incentivise banks and deployers to invest and expand ATM networks, thereby improving accessibility and convenience for customers nationwide.”
According to data from the Reserve Bank of India (RBI), the number of ATMs dropped from 219,000 in September 2023 to 215,000 in September 2024, with a significant decline in off-site ATMs from 97,072 in September 2022 to 87,638 in September 2024.
In 2018, the RBI had asked banks to use lockable cassettes in ATMs, which shall be swapped at the time of cash replenishment. The decision ensures that cash-in-transit personnel who are tasked with loading cash into ATMs, would no longer need to come in contact with cash.
