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MPs seek answers over future of free cash machines

Written by: Paloma Kubiak
An influential group of MPs has written to the chair of LINK to understand how its fee changes could impact consumers following concern the proposals will reduce free ATMs.

The chair of the Treasury Select Committee, Nicky Morgan MP, has written a letter to Mark Boleat, chair of LINK, seeking clarification about its proposed measures to address falling consumer demand for cash payments.

It comes as earlier this month, LINK, which runs a network of 70,000 ATMs – of which 80% are free to use – proposed changes to interchange fees. These are fees paid by card issuers to ATM operators and LINK proposed a 20% reduction in interchange rates over the next four years, from around 25p to 20p per cash withdrawal.

LINK said the proposal “will retain an extensive network of free ATMs for consumers”. But concerns were raised that such a move would lead to a vast reduction in free access to cash for British citizens and businesses.

As such, the MP has asked for the following clarifications:

  • Whether the proposals will preserve the existing geographic spread of ATMs, and whether they’ll have a negative impact on financial inclusion
  • How many ATMs are projected to close as a result of the proposals
  • What arrangements are in place to monitor the ATM closures and introduction of ATM fees that would lead to consumer detriment
  • What action LINK will take if changes aren’t consistent with consumer needs
  • LINK’s process for determining whether an ATM closure will lead to “consumer detriment”
  • For areas that don’t qualify for subsidies as part of the Financial Inclusion Programme, how LINK will prevent the closure of an ATM not in a subsidy area
  • The interaction of LINK with the Payment Systems Regulator and the Treasury over the development of the proposals.

Morgan said: “LINK established its Financial Inclusion Programme as a result of an inquiry from a previous Treasury Committee into the provision of cash machines.

“The programme requires LINK to defend and improve access to cash for all UK consumers. Yet with the proposed 20% reduction of the interchange fee, it seems intuitive that some machines will become economically unviable.

“There have been concerns that the proposals could lead to ‘ATM deserts’ for communities. As the Bank of England’s chief cashier said, cash continues to play a key role for many, with 2.7 million people in the UK reliant almost entirely on cash transactions.

“I have asked LINK for assurances that the proposals will preserve the existing geographic spread of ATMs, and will have no negative impact on financial inclusion.”

In his initial response, Boleat said:  “LINK is committed to maintaining an extensive free network of ATMs for consumers for years to come.

“LINK’s independent board believes that reform is required to interchange and that it is currently too high. In particular, we do not see the growth of ATMs that is underway as sustainable, given the declining use of cash for making payments.

“The board believes its proposals will protect the future of the LINK network and will deliver the right outcome for consumers. We do not envisage any scenario where there will be areas of the UK which will not continue to have free access to their money.

“Our proposals include a strong Financial Inclusion Programme that will ensure that there is positive impact on financial inclusion.”

The consultation ends this week and the results will be published in January.

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