RBI's new rules on interchange fee, bulk payment system come into effect: How will it affect us?

National Automated Clearing House (NACH) has now been made available on all days of the week, starting from August 1, 2021.

Reserve Bank of India
Reserve Bank of India

The Reserve Bank of India's new rules on raising interchange fee and making bulk payment facility available on all days of the week came into effect from August 1, 2021. 

The Reserve Bank of India has raised the interchange fee for financial transactions from Rs 15 to Rs 17 to help banks meet the costs of ATM deployment and maintenance. 

The interchange fee for non-financial transactions has also been increased from Rs 5 to Rs 6. 

What is interchange fee?

An interchange fee is a fee that is charged by the banks to the merchant who processes a credit card or debit card payment.

How will the change in interchange fee affect us?

•Customers can now conduct only five free transactions, including both financial and non-financial from the ATMs of their banks. 

•In case of other bank ATMs, customers have been allowed to make three free transactions in metro centres and five free transactions in non-metro centres. 

•The bank will charge the customer Rs 20 per transaction after all the free transactions are exhausted. The RBI has allowed the banks to increase the customer charges to Rs 21 per transaction to compensate the banks for the higher interchange fee and given the general escalation in costs.

•The last change in interchange fee rules happened in August 2012. 

NACH made available on all days

National Automated Clearing House (NACH) has now been made available on all days of the week, starting from August 1, 2021.

What is NACH?

•NACH is a bulk payment system, which is operated by the National Payments Corporation of India (NPCI). 

•It facilitates one-to-many credit transfers such as payment of dividend, interest, salary and pension.

•It also facilitates payment collection pertaining to gas, electricity, telephone, water along with investments in mutual funds, insurance premium and periodic installments towards loans.

•RBI governor Shaktikanta Das had announced during the bi-monthly monetary policy review in June that NACH will be available on all days of the week to further enhance the convenience of customers.

•Earlier, the facility was available only when the banks were open, generally between Monday to Friday. So the auto-debit instructions provided by the bank account holder were not processed on days when the banks were closed such as Sundays, bank holidays and gazetted holidays. 

How will this affect us?

•By making the bulk payment system-NACH available on all days of the week, salary payments to employees would become smoother as most companies use NACH for salary credits. 

•Earlier, due to the non-availability of the facility on holidays or Sundays, the salary payments could not happen on those days and usually got delayed to the next working day. 

•In fact, with the new changes, all the transactions conducted using the NACH system can now be done anytime, any day of the week. 

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