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Lifeline for free-to-use ATMs

Paloma Kubiak
Written By:
Paloma Kubiak

Concerns over the future of free-to-use ATMs have been eased for now after cash machine network LINK announced it was shelving plans which could have seen a reduction in the number of free cashpoints.

LINK said it was cancelling the next reduction of the interchange rate and pushing back the date of the final planned cut – a welcome move for consumers, according to a campaign group.

Interchange is the fee paid by card issuers to ATM operators to cover the cost of a cash withdrawal, but the costs are often passed on to consumers.

LINK, which runs 70,000 ATMs, 82% being free, announced reductions in these fees in a bid to maintain free-to-use cash machines and to combat falling consumer demand for cash payments.

But critics feared a reduction in interchange would actually cut the number of free-to-use cashpoints as it would make running them less profitable. Most are kept free thanks to the fees paid by banks.

Vulnerable, elderly people and those living in rural communities less well served by an ATM network would be hardest hit, critics argued.

LINK previously scheduled a phased reduction of interchange fees, by 5% each year for a four-year period.

The first reduction in interchange of 5% took effect on 1 July 2018 and the second 5% reduction will take place on 1 January 2019.

But a 6% year-on-year fall in the volume of ATM transactions has resulted in the LINK board deciding to cancel the third reduction, due in January 2020 and put on hold the fourth reduction, due in January 2021, pending a further review next year.

‘Consumers’ access to cash must be protected’

Harry Rose, Which? money editor, said: “LINK’s actions have already had an impact on the ATM network, with more than 500 cashpoints a month closing this year [both paid and free-to-use], including a reduction in the number of free-to-use machines.

“Its decision to alter its original proposal is welcome, and it is critical that consumers’ free access to cash is protected.

“However, the decision should have been subject to proper scrutiny before the first cuts to the interchange fee were implemented, and the regulator must now urgently step in to independently conduct a wider review to investigate the drivers behind LINK’s decision and impact the changes will have on communities.”

John Howells, chief executive of LINK, said it is committed to maintaining the UK’s extensive coverage of free-to-use cash machines for many years to come but added that consumers are turning to alternatives to cash “more quickly than expected”.

He said: “LINK will therefore adjust interchange to maintain free-to-use coverage in line with our commitments to the public and to our participants. LINK will continue to monitor the cash machine network carefully and will not hesitate to make further changes as needed to protect UK consumers.”