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ATM closures: U-turn on funding cuts after Which? Money investigation

Link scales back ATM fee cuts amid unprecedented cashpoint closures

The UK’s largest ATM network has watered down plans to change the way free cash machines are funded after a Which? Money investigation revealed cash machines were disappearing at a rate of several hundred per month.

Link had proposed a phased 20% reduction to the interchange fee – the amount paid by banks to ATM operators when you use your card to make a free withdrawal.

However, on 16 July it announced that the cuts would be frozen at 10% pending a review next year.

The U-turn comes less than a month after Which? Money revealed around 300 ATMs had closed every month between November 2017 and April 2018.


Why have so many ATMs been closing?

ATM operators told us that they had reduced their estates in anticipation of the cuts to interchange, which they claimed threatened their entire business models.

This fee was previously set at around 25p. Link’s original proposal would have seen it reduced to around 20p over four years.

Our analysis of Link data showed that ATM closures had accelerated dramatically in the months after it first announced its plans.

Link originally disputed our findings, but later published figures showing the picture was even more bleak than we had found – ATMs closed at a rate of more than 500 per month in the first five months of this year.

There were 66,999 live cashpoints in the UK at the end of May, down from 69,610 at the start of the year.

You can use the map below to explore where ATMs were distributed in April 2017, including the distance to the nearest one.

Link has now pledged to cancel the third of the four proposed cuts of 5%, and to put the fourth one on hold pending a review in 2019.

‘Link is committed to maintaining the UK’s extensive coverage of free-to-use cash machines for many years to come,’ the network said in a statement announcing its change of plan.

‘Link will therefore adjust interchange to maintain free-to-use coverage in line with our commitments to the public and to our participants,’ it added.

The network said its change of heart had been motivated by falls in the volume of ATM transactions.

What is the ATM interchange fee?

Every time you use a free-to-use cashpoint, the bank or building society that issued your card has to pay a fee to the cash machine operator.

This fee – known as the interchange – was previously set at around 25p. So, if you used your HSBC card to get cash out from a Santander machine, HSBC paid Santander the 25p interchange rate.

The first of four planned 5% cuts to the interchange fee kicked in on 1 July. A further three annual reductions were scheduled to take the fee down to around 20p by 2021.

Which? has for a long time expressed concerns that the cuts are being driven by forces which do not put the consumer first.

Despite being a not-for-profit, Link is still subject to commercial pressures.

Its very existence is under threat from rival schemes run by Visa and Mastercard, who aim to tempt banks away from Link with even smaller interchange fees, which the Payment Systems Regulator (PSR) has noted may not be based on any realistic assessment of operator cost.

Visa and Mastercard have a clear incentive to nudge consumers away from cash and onto electronic forms of payment.

This is why we have joined up with the Federation of Small Businesses to campaign for the PSR to launch an urgent review of any cuts to the interchange rate.

Will Link’s latest announcement stop ATMs from disappearing?

Link’s U-turn was greeted with cautious optimism by the industry. Ron Delnevo, Europe Director at ATMIA, which represents interests across the ATM industry, had previously warned that Link’s original plan could lead to ATM losses in the tens of thousands over the next decade.

Responding to the latest announcement, he said: ‘If they stick to the plan – if the 10% is the full extent of the cut – we will see a lot of machines safeguarded.’

Peter McNamara, Chief Executive of NoteMachine, one of the largest independent ATM providers, echoed the sentiment, adding:  ‘We will be watching to see how things progress in terms of a final decision on further reductions.’

The PSR welcomed Link’s decision to water down its proposals and vowed to continue monitoring the situation. However, Which? Money maintains the regulator should scrutinise the cash landscape with an independent review.

Use the interactive table below to discover how cash machine provision changed in your local authority between November 2017 and April 2018. (source:Link)

‘I’m losing confidence in the PSR,’ said Delnevo. ‘They ought to be leading the way but they’re not. They certainly need to have a very detailed look at how cash is going to work for everybody in the UK going forward.

‘But I’m losing confidence that they will. Somebody – be it the treasury, the Bank of England, the government – needs to step in and make sure that it happens.’

Support our cash machine campaign

Which? and the Federation of Small Businesses have launched a campaign to ‘Save Our Cashpoints,’ calling on the Payment Systems Regulator to conduct an urgent review to fully evaluate the impact that these changes could have on communities and consumers’ ability to use cash payments.

If you’re worried about cashpoint provision in your area or across the UK, please sign our petition.

You can also tell us about any problems you’ve encountered with a local cashpoint, or report any local cashpoint closures using our reporter tool.

Report a cashpoint

If you’ve encountered problems with a local cashpoint, such as a lengthy walk to get to it, constant breakdowns or being out of cash most of the day – we want to hear about it. Your story could help us highlight the flaws in the current system and protect your access to cash.

Tell us about problems with a cashpoint in three steps:

  1. To find your cashpoint, enter a postcode or a place name, then select the size of area around it you want to search.
  2. Click/tap the red pin for the cashpoint you want to report – a window will appear with the name of the cashpoint and the fee (if any) that it charges.
  3. Click/tap ‘Report a problem’ and complete the form to tell us what’s wrong, or ‘Report closure’ if the cashpoint shown has closed down.

If your cashpoint isn’t shown, let us know here.

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