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LINK ATM funding shake-up could reduce free access to cash

Paloma Kubiak
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Paloma Kubiak

Reducing consumer demand for cash has led UK’s cash machine network LINK to propose several measures, prompting fears there may be a reduction in free ATMs.

LINK runs a network of 70,000 ATMs with 80% being free-to-use. However, recent changes to interchange fees – a fee paid by card issuers to ATM operators – has impacted the funding of free-to-use cash points.

This coupled with falling consumer demand for cash payments as people turn to contactless and online payments, means LINK has proposed a number of measures to reduce the interchange level.

One is a 20% reduction in interchange rates over the next four years, from around 25p to 20p per cash withdrawal. This, LINK said, “will retain an extensive network of free ATMs for consumers”.

It is also looking at reducing the interchange by 5% a year to give ATM operators the chance to reduce their costs. It is also proposing to boost LINK’s Financial Inclusion Programme to maintain free access to cash for all in the UK.

It said it wants to maintain the present geographical spread of ATMs, with any reduction in the number of ATMs intended to be in areas where there are currently multiple ATMs very close together. Around 80% of free-to-use ATMs are currently within 300 metres of another free-to-use machine.

LINK’s CEO, John Howells, said: “LINK is committed to maintaining an extensive network of free-to-use cash machines. Free access to cash is vital for UK consumers and LINK intends to maintain this for many years to come.”

However, Ron Delnevo, executive director Europe of the ATM Industry Association, said: “Make no mistake, the proposed reductions in LINK Interchange may well lead to a vast reduction in free access to cash for British citizens and businesses.

“Any money saved by a tiny number of banks, which some estimates put at tens of millions of pounds each year, will effectively be at the expense of already hard-pressed consumers. This when ATM costs in the UK are already among the lowest in the world.”

Delnevo added that an unwarranted shake-up of LINK will hit the most hard-up the heaviest – particularly the millions of people who rely on cash for day-to-day budgeting.

“We already have thousands of bank branch deserts in the UK. The proposals for interchange reduction are likely to create ATM deserts, where communities will wither because there is no local convenient access to cash and other financial services.” He said regulators and the government need to step in to stop a ‘potentially catastrophic’ situation developing.