Plans to cut the fees ATM hosts earn could lead to a “significant reduction” in free-to-use cash machines, one expert has warned.
LINK, the largest cash machine network provider in the UK, has been consulting on dropping the fees banks pay ATM hosts per ATM withdrawal by 20% – from 25p per withdrawal to 20p per withdrawal.
Concerns had been raised that if ATM hosts get paid less, they may be less incentivised to continue offering cash machines.
But LINK has today revealed that it will continue with its plans to reduce fees from 25p per withdrawal to 20p, although it says that this will be a “phased reduction” over four years beginning with a 5% reduction to 24p from 1 July 2018.
It adds that the impact on consumers will be reviewed each year, while ATMs that are one kilometre or more from the next free ATM will be exempt from the fee cut. In addition, a premium of up to 30p – an increase from 10p at present – will be introduced to ensure free ATMs remain in areas that “could not otherwise sustain them”.
Hannah Nixon, managing director of the Payment Systems Regulator (PSR), believes the outcome of the consultation is a “welcome improvement”. She comments: “I am pleased that LINK has bolstered its initial plans to make sure people will continue to have widespread free access to cash.
“We will require LINK to provide us with regular, detailed reports on the impact the changes are having and the steps that LINK will take to address any negative impact. We will intervene if we believe the current broad geographical spread of free-to-use ATMs is threatened.”
However, Gareth Shaw, money expert at consumer group Which?, is concerned that the plans could still result in ATMs being axed. Earlier this month the consumer group found that more than 200 communities across Britain have “poor ATM provision” or no cash machine at all.
Mr Shaw says: “LINK’s plans could still lead to a significant reduction in free-to-use ATMs across Britain, leaving consumers facing an uphill struggle to access the cash they need.
“It’s alarming that these potentially far-reaching proposals appear to have simply been waved through without a thorough public consultation. With over two million consumers in the UK reliant almost entirely on cash, it’s vital that the Payment Systems Regulator conducts an urgent market review.”
Nicky Morgan MP, chair of the Treasury Committee, adds that the PSR must ensure consumers don’t lose out. She warns: “Any significant reduction in free access to cash would be an unacceptable outcome. This will be the first major test for the Payment Systems Regulator. It must ensure that customers do not lose out as a result of LINK’s proposals.”
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