ATM withdrawals to get costlier from May 1 as RBI raises interchange fees: Check new charges, other details

The Reserve Bank of India (RBI) has raised interchange fees on ATM withdrawals, which will make it more costly to withdraw cash from ATMs in India starting May 1, 2025. Customers who frequently use ATMs will be affected by this change, which will increase the cost of withdrawals.

What is an ATM interchange fee?

An ATM interchange fee is a charge that one bank pays to another for offering ATM services to customers. Banks often pass on these charges to users as part of their banking costs. For instance, if you are an HDFC Bank customer and go to an SBI ATM to withdraw money and reside in Delhi, HDFC Bank will charge you if you make the fourth transaction in a month at an SBI ATM as an HDFC Bank customer.

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How much more will customers pay?

According to the RBI notification on March 28, 2025, "Based on a review, it has been decided as follows:

a. The ATM interchange fee will be as decided by the ATM network.
b. 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 centers and five transactions in non-metro centers. Beyond the free transactions, a customer may be charged a maximum fee of Rs 23 per transaction. This shall be effective from May 01, 2025.
c. Applicable taxes, if any, shall be additionally payable.
d. These instructions shall also apply, mutatis mutandis, to transactions done at Cash Recycler Machines (other than for cash deposit transactions)."

Category	Free Transactions Per Month	Charges Beyond Free Limit	Additional Notes
Own Bank ATMs	5 (Financial + Non-Financial)	Rs 23 per transaction	Taxes applicable
Other Bank ATMs (Metro Cities)	3 (Financial + Non-Financial)	Rs 23 per transaction	Taxes applicable
Other Bank ATMs (Non-Metro Cities)	5 (Financial + Non-Financial)	Rs 23 per transaction	Taxes applicable
Cash Recycler Machines	Same as ATMs (except cash deposits)	Rs 23 per transaction	Taxes applicable
Interchange Fee	Decided by ATM network	N/A	As per network rules

The price hike is expected to affect customers of smaller banks the most, as these banks depend on larger financial institutions for ATM infrastructure and services.

The government continues to promote digital banking as the preferred mode of financial transactions, further reducing dependence on cash-based payments. With the RBI set to increase ATM withdrawal charges from May 1, 2025, digital banking is becoming a more cost-effective and convenient alternative.

Digital banking allows users to make transactions anytime, anywhere, eliminating the need for physical visits to banks or ATMs. The rise in ATM withdrawal charges makes digital payments a cheaper option for customers. With UPI, mobile banking, WhatsApp banking, and internet banking becoming mainstream, the government aims to reduce dependency on cash transactions.

Vishal Maru, Global Processing Head, Financial Software and Systems (FSS), says, “The Reserve Bank of India’s decision to permit banks to raise ATM withdrawal charges is an encouraging move. This increase can help banks and service providers alike, as the additional revenue stream can offset the escalating costs of maintaining and securing ATM networks, especially amid rising inflation and technology demands. It’s an opportunity to reinvest in infrastructure, making ATMs more reliable and efficient.”

How many free transactions are allowed as per RBI?

As per an RBI circular dated October 10, 2014, the number of free transactions in a month for other bank ATMs has been reduced from five to three (including both financial and non-financial transactions). However, three free ATM transactions are applicable for ATMs at metro locations. This includes Mumbai, New Delhi, Chennai, Kolkata, Bengaluru, and Hyderabad. However, free ATM transactions at other banks remain five at other locations except those mentioned above.

Can ATM charges be levied on failed transactions?

ATM transactions fail several times due to technical failure. And this leads to confusion among bank customers who are confused if the failed ATM transactions will be counted as part of the free transactions.

The RBI, in its circular dated August 14, 2019, has clarified that transactions that fail on account of technical reasons like hardware, software, communication issues, non-availability of currency notes in the ATM, and other declines ascribable directly/wholly to the bank/service provider, invalid PIN/validations, etc., shall not be counted as valid ATM transactions for the customer. Consequently, no charges shall be levied.

The circular further clarified that non-cash withdrawal transactions (such as balance enquiry, cheque book request, payment of taxes, funds transfer, etc.), which constitute ‘on-us’ transactions (i.e., when a card is used at an ATM of the bank that has issued the card), shall also not be part of the number of free ATM transactions.