Britain’s free cash machines risk being wiped out unless urgent action is taken to protect them, consumer group Which? has warned.
Almost 1,700 free machines switched to charging in the first three months of the year, with a majority these conversions taking place in March, according to the consumer group.
Most of the ATMs affected are operated by Cardtronics – the UK’s biggest cashpoint operator – which has warned it is likely to convert a further thousand machines to charge fees in the coming months.
The cashpoint provider Notemachine has also warned it is considering converting up to 4,000 machines in its 7,000-strong network to charge fees.
This could result in Britain losing 13% of its free cashpoints in only a few months.
Which? says that machines that have been converted are charging fees of at least 95p per withdrawal, with nearly a quarter paying between £1.50 to £1.99.
The fall in the number of free cash machines comes after a cut in the fees operators receive each time an ATM is used.
The fee, also known as the interchange rate, is charged by Link to banks and building societies for their customers to withdraw money.
Link began to cut the interchange fee last year, with annual cuts taking it from 25p to 20p over four years.
However, due to a fall in the number of free cash machines, Link decided to put on hold the further reductions pending a further review.
Peter McNamara, chief executive of NoteMachine, says the reductions in the interchange fee have forced ATM operators to reconsider the commercial sustainability of maintaining a free-to-use network.
He says: “The whole LINK system is now under severe threat from a toxic combination of wholesale bank branch closures, the unavoidable shift of many free-to-use machines to a charging model, and the mothballing of low volume machines which are no longer economically viable under the charging regime.
“Unless urgent action is taken to reduce the pressure on ATM operators by reversing the interchange fee reductions, NoteMachine will be forced to begin converting ATMs to surcharging."
A spokesperson from Cardtronics says: "We have been forced into charging a fee for cash withdrawals on some of our machines where LINK's cuts have left us with no choice.
“The decision on whether to introduce a fee is taken on a case-by-case basis and reflects the economic viability of the individual machine. We only ever charge a fee when there is no other option apart from removing the machine altogether.”
John Howells, chief executive of LINK, says: “Free access to cash is vital for consumers and the UK enjoys extensive coverage that LINK is committed to protecting.
“There are more than 50,000 free-to-use ATMs across the UK, 10,000 more than we had in 2009, and currently 12,700 pay-to-use cash machines, down from over 23,000 in 2009. Less than 3% of withdrawals at LINK ATMs incur a fee."
He adds: "However, we agree with Which? that regulatory support is needed as there is a risk to cash access in the long run.”
Concerns about a cashless society
The raft of bank branch closures in recent years has left towns and villages across the UK without access to basic banking services, hitting the elderly and the disabled particularly hard.
Without regulatory action the UK risks drifting into a no-cash society that could shut people out of paying for local goods and services according to Which?.
As a result of more and more people turning to contactless payments, cash machines are closing at a rate of 250 a month as operators shut unprofitable ones.
In 2017, debit cards overtook cash as the most popular payment method for the first time.
People are using cash for three in every 10 transactions, down from six in 10 a decade ago. In 15 years, one in every ten payments could be in cash.
The Access to Cash Review published last month warned that Britain’s cash infrastructure is on the “verge of collapse”, potentially leaving around eight million adults struggling to cope.
Gareth Shaw, head of money at Which?, says: “Communities are being stripped of free access to cash at an alarming rate that could hit the most vulnerable in our society the hardest, while denying millions of people free withdrawals.
“A regulator is desperately needed to get a grip of these rapid changes across the cash landscape and ensure all those still reliant on this important payment method aren’t suddenly shut out from accessing the cash they need in their daily lives.”