Securing Access: Free Cash Machines in UK are Shrinking at a Worrying Rate According to Which?

Published on
May 2, 2019
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CMS Analytics’ ‘Securing Access’ series highlights initiatives around the world which are helping maintain and improve both the public’s and businesses access to cash.

According to a recent study by the consumer champion group Which?, 1,700 ATMs have started applying charges to withdrawals made in the first three months of this year.

What’s the reason?

The charges come in response to the cuts in the interchange rate made last year by LINK. LINK is an organization which oversees UK ATMs and has said that these cuts are aimed at protecting the ATM network. The interchange rate has been left unchanged by LINK for free-to-use ATMs which are one kilometer or more from the next closest ATM. However, for most ATMs, the interchange charges have reduced from 25p to 23p per withdrawal. These interchange rates are what ATM operators receive from banks every time one of their cash machines is used.

NoteMachine operates 7,000 cash machines across the UK and has said that the reduced charges mean that they are considering introducing fees at up to 4,000 of its ATMs. Additionally, Cardtronics has said it feels “forced” to introduce fees to some of its ATMs where LINK’s interchange reductions made ATMs not economically viable. Cardtronics has also said that each decision to charge at an ATM is based on the individual case and that they will only charge at those ATMs where there is no other option unless they were to remove the machine altogether. Another 1,000 Cardtronics ATMs are likely to be converted over the coming months to combat these challenges.  This could mean a 13% decrease in free ATMs in the UK in just a few months.

Cause for Concern

The concern lies with those communities who rely heavily on cash. The reported charges range from 50p to £1.99 – and these costs can greatly impact personal finances for those on a tighter budget. These charges will also affect the more vulnerable groups and rural communities, where walking to the closest free-to-use cash machine may prove very difficult.

Despite cash usage halving in the past ten years, the Bank of England’s data suggests that 2.2 million people are almost entirely reliant on cash. As such, the need for free access to cash is fundamental for large numbers of the community. Furthermore, the LDC Retail and Leisure Report has stated that in 2018, there were 716 net closures in the UK. With the introduction of these charges to ATMs coupled with the ongoing bank branch closures, the ability for vulnerable and rural communities to access cash is increasingly shrinking.

Which? is calling for a regulator to address these rapid changes to ensure that those who are still heavily reliant on cash can easily access it. Cardtronics has also said they are asking the Payment Systems Regulator (PSR) and the Financial Conduct Authority (FCA) to ask LINK to withdraw the second interchange cut to stop the impact that these charges are having on the provision of cash to communities through ATM networks until they can decide on a sustainable long-term solution.

Bottom Line

It is true that cash usage is on a decline, but this is not the case for everyone in the UK. LINK’s decision to cut interchange rates is leaving ATM operators with little choice but to charge for access to cash. This could accelerate the decline of cash which is worrying for those people and communities who heavily rely on cash in their day-to-day lives.

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