Since demonetization, digital transactions have surged in India, yet cash remains essential for many activities.
Recently, ATM operators have been advocating for an increase in the interchange fee for cash withdrawals.
Proposal to Raise Fee to Rs 23
According to a report by the Economic Times, the Confederation of ATM Industry (CATMI) has proposed increasing the interchange fee to Rs 23.
This move aims to bolster the financial viability of ATM operations.
Stanley Johnson from AGS Transact Technologies highlighted that the fee hasn’t been raised in two years,
with CATMI pushing for Rs 21 while other manufacturers suggest Rs 23.
Current Fee Structure
Currently, the interchange fee stands at Rs 17 per transaction.
AGS Transact Technologies noted that previous fee adjustments took considerable time but expects quicker approval this time due to consensus within the industry.
In 2021, the interchange fee was raised from Rs 15 to Rs 17 per transaction,
which is paid by the card-issuing bank to the ATM-operating bank.
Impact on Consumers and Banking Services
Banks typically offer a set number of free transactions each month to customers, varying by city.
Major cities like Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai, and New Delhi provide at least five free transactions, while other cities offer three.
This proposed increase in interchange fees reflects ongoing efforts
to balance the operational costs of maintaining ATMs with the evolving digital payment landscape in India.
