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How Can We Avoid Missing LINK?

The LINK UK ATM Network announced a few months ago that it planned to reduce ATM interchange by 20% over 4 years.

This move stunned many observers because LINK interchange is calculated each year using a transparent cost-recovery formula, which was approved by UK Regulatory Authorities well over a decade ago.

The essence of the argument put forward by the LINK Board to justify the massive arbitrary cut in interchange is that there are too many free-to-use ATMs in the UK.

How can a judgement be formed as to whether there are too many ATMs in the UK?

The easiest way is to look at comparisons with the UK’s European neighbours.

So here are some international comparisons that completely demolish the argument put forward by the UK LINK ATM Network that there are too many free-to-use ATMs in the UK.

  • Switzerland has 7000 ATMs, each averaging 1800Cash Withdrawals per Month per ATM; 3000 bank branches; population 8.2 Million.
  • France has 56,000 ATMs, each averaging 2200 Cash Withdrawals per Month per ATM; 40,000 bank branches; population 66.6 Million.
  • Germany has 58,000 ATMs, each averaging 2500 Cash Withdrawals per Month per ATM; 36,000 bank branches; population 82.2 Million.
  • Poland has 23,000 ATMs, each averaging 2600 Cash Withdrawals per Month per ATM; 8000 bank branches; population 38.5 Million.
  • The UK has 55,000 ATMs, each averaging 4800 Cash Withdrawals per Month per ATM; 8000 bank branches; population 66.1 Million.

It is crystal clear that UK free-to-use ATMs are used for cash withdrawals almost TWICE as often as the ATMs in any of our European neighbours. On that basis, surely there is an argument that MORE ATMs are needed in the UK, rather than less!

The truth is that cash remains too popular in the UK for the liking of some banks and International Card Schemes, who only maximise their profits when the public - you and me - use cards or digital payment methods.

By the way, please note also from the figures above the number of bank branches in other European countries. The UK has the lowest number of bank branches per 100,000 residents of ANY major European market.

There used to be nearly 20,000 bank and building society branches in the UK. There are now only 8000 and that number is forecast to shrink to 4000 within the next four years.

Many people are asking why, having lost so many bank branches, the UK Public is now being told they cannot have the number of ATMs they have now, even though those ATMs are so well used. This is particularly hard for the public to accept when they look at the figures released by LINK in relation to the number of ATMs they would like to see closed.

That figure is 5000 ATMs.

LINK has essentially claimed that there are that number of “excess” ATMs in town centre and that slashing interchange by 20% will lead to their closure. However, as noted above, 4000 UK bank branches are likely to close in the next 4 years. Each branch has, on average 2 ATMs, so branch closures alone will lead to a loss of 8000 ATMs, without any need to reduce interchange. That’s 3000 more ATMs than LINK claim need to be removed.

And, of course, bank branches in the UK are now mainly to be found ( if one is lucky to find one at all) in town centres, so the ATMs lost through branch closures will be from the very locations LINK claim need fewer ATMs than they have currently.

In any case, the truth about major town centres is that bank branches in such locations often have as many as 10 ATMs. Take the example of Market Street in Manchester, a major shopping hub in the centre of the city. In this street there are branches from 4 of the Big 5 UK banks with, between them, over 30 ATMs!

Clearly, banks don’t need LINK interchange slashed to reduce the number of ATMs in the UK. They could simple remove two from each of their own major town centre branches and, hey presto, more than 5000 ATMs will disappear.

The truth, of course, about the proposed arbitrary cuts in interchange is that they are NOT targeted at removing bank ATMs in town centres. The banks are happy enough at the moment to provide cash withdrawals at their remaining branches, because interchange is paid at the lowest level on cash withdrawals on ATMs in such locations. Interchange is highest on ATMs away from bank branches, most often operated by super-efficient ATM operators who, thanks to their efficiency, can rightly earn a small profit per transaction from running such ATMs.

With bank branches closing, and their ATMs closing with them, thousands of smaller towns, rural villages and urban suburbs have been left with no bank branches and no bank ATMs. These communities are now largely dependent on free-to-use Independent ATM Deployers ATMs for convenient local access to cash.

The real problem is that some banks no longer want to make the small LINK interchange payments that enable their customers to get cash from Independent ATMs. So they are telling LINK that savage arbitrary cuts in interchange are required, the threat being that if such cuts are not forthcoming, the banks concerned will leave the LINK Network. This in turn would ultimately lead to the end of convenient access to cash for 66 Million UK Citizens, becaus the Network would completely unravel.

So the LINK Board, supposedly independent, but in reality apparently forced to do as they told by big banks, is trying to press on with the arbitrary cuts.

A popular question is: if the cuts go ahead, how many ATMs will be lost?

To understand the answer to that question, it has to be understood that the first arbitrary cuts in interchange payments are almost certainly going to be followed by more of the same nature.

The first 20% cut will be phased over four years. At the end of that time, the banks who call the tune at LINK are almost certain to demand further cuts.

Banks want everyone in the UK to use cards, mobile payments and internet banking. They have no use for cash. It doesn’t make them enough money.

To justify their demand for further cuts in LINK interchange, the banks will no doubt quote the Visa interchange rate, a below-cost recovery interchange which, conveniently, can also be arbitrarily set by an organisation which has declared a worldwide “ War on Cash”. With ATMs delivering 70% of the cash used on the planet, a “war” on ATMs very much supports Visas war on cash itself.

As soon as LINK interchange drops to the same level as Visa interchange, it seems inevitable that Visa interchange will be moved further downwards.

To appreciate what all this means for UK ATM numbers, it is important to look at the economics of locating ATMs away from bank branches.

Most ATMs in the UK NOT at bank branches are located at retail premises, either Through The Wall ( or Window) or placed inside the shop. Most of the shops providing sites for ATMs are owned by independent retailers. Often they are Convenience Stores. There are about 55,000 Convenience Stores in the UK, many the only shops servicing the needs of tight-knit local communities. These local independent retailers currently receive a small rental payment from ATM operators when a machine is located at their premises. This rental is often very important revenue for independent retailers, whose profits are under huge pressure from the activities of the likes of Tesco and Sainsbury, not to mention Lidl and Aldi.

So here is the precise thinking of the banks pushing for cuts in LINK interchange. There are over 30,000 free-to-use ATMs located away from bank branches impacted by the cuts. With contracts for ATM sites usually lasting 5 years, that means that on average contracts for 6000 or more sites will need to be renegotiated each year.

What LINK - and the controlling banks - are hoping is that the Independent ATM Operators, who mainly own the ATMs away from bank branches, will negotiate site rentals down in negotiation with retailers. Of course, small retailers can ill-afford to give up the rental they receive from ATM operators, not least because the retailers often have to pay Business Rates on the ATMs on their premises, along with higher insurance premiums, because an ATM is judged by insurers to increase the risk of attacks on the premises. Despite the costs, many of the retailers may well agree to sacrifice rental payments, so that they can go on meeting the cash needs of residents in their local community.

However, some retailers will not agree to accept rental cuts. They may fairly regard the space in their shops as too valuable to be given away for nothing. Such retailers will either ask for the ATMs to be removed or to be switched to pay-to-use.

Of the 6000 ATMs with contracts due for renegotiation each year, perhaps one or two thousand free-to-use machines will be lost as a result of the first arbitrary cuts in interchange. So, over the first 4 years of interchange cuts, between 4000 and 8000 free-to-use ATMs are likely disappear around the UK.

However, that is only the first phase. As already noted, the banks who pull the strings at LINK will not be satisfied with the initial 20% arbitrary cuts in interchange. They will demand more cuts and, given that the precedent for arbitrary reductions will have been established, how can the LINK Board refuse?

What all this means is that when the ATM contracts NEXT come up for renewal, about five years from now, there will no longer be rental payments for retailers to sacrifice. They will already have largely disappeared. With the super-efficient Independent ATM operators already having very low operational costs, there will be no room for further cost savings. The further cuts in interchange will mean thousands of free-to-use ATMs plunge into loss-making. They will need to be closed or switched to pay-to-use.

So, in 10 years time, by the time two full rounds of ATM contract renegotiations have been completed, few of the 30,000 plus free-to-use ATMs away from bank branches currently, providing vital cash services for the UK public, are likely to have survived.

And, remember, bank branch closures will also lead to further thousands of ATMs being lost.

All this probably explains why John Howells, the CEO of LINK, told the Daily Mail just before Christmas 2017 that in ten years time there will be very few ATMs in the UK. He understands the likely scenario resulting from arbitrary cuts in interchange.

In 10 years time, if LINK is allowed to get away with the arbitrary cuts, in my view we are likely to have around 35000 less free-to-use ATMs in the UK than we have today.

Yes, that’s correct, only around 20,000 will be left.

The few remaining free-to-use ATMs will be located at some of the remaining bank branches - though by that time many branches will no doubt have been declared “cashless” by their bank operators - and at Sainsbury and Tesco stores. The giant retailers are also banks in their own right, so have different economics in terms of operating ATMs.

If you are thinking that cashless bank branches are a figment of my imagination, think again. Bank of Ireland, who operate thousands of ATMs in the UK, are already introducing them and more banks seem certain to follow their lead.

In any event, in addition to the free-to-use ATMs, there are also likely to be a number of pay-to-use ATMs. How many will depend on the popularity of cash at that stage.

Do not think for one minute , by the way, that LINKs “Financial Inclusion” measures will save the day by making cash available to those who most need it to manage their daily lives.

In 10 years time, those who are regarded as financially excluded will be forced to use cards or digital payments. They will effectively be told that “beggars can’t be choosers” - and given no choice as to what payment method they use. All this will be very convenient for the “Authorities”, since they will be able to control precisely how much benefit recipients and others in a disadvantaged position spend and, of course, exactly what they spend it on.

Horrified? Good. Because ultimately you need to understand that is where a “cashless society” will leave ALL individuals. Totally controlled, without a even a vestige of personal choice.

Anyway, as far as ATMs are concerned, missing LINK would be the outcome for the British public.

So what is to be done?

Patently, the arbitrary cuts to interchange cannot be accepted. A transparent method for the calculation of cost-recovery interchange must be retained.

With 30,000 plus ATMs threatened by the proposed cuts, bank branch, ATM and cash deserts would soon become the norm in thousands of communities around the UK.

I believe that there needs to be an Independent Inquiry into all the issues impacting LINK and interchange. By “Independent” I mean not controlled in any way by LINK itself. It should be run under the auspices of the Payment Systems Regulator, an organisation obliged to give priority to the interests of UK consumers.

The Independent Inquiry may lead to changes and even cost savings, but those have to be made transparently and in manner that allows for reasonable profits for efficient ATM operators. Those profits will underwrite further investment in ATM innovation, allowing ATMs to become full local substitutes for the thousands of bank branches that have closed around the UK.

To secure a Public Inquiry will require intervention of the Payment Systems Regulator, Treasury or Bank of England.

I urge each of those bodies to act now, in the public interest, to halt the arbitrary cuts and to ensure the required Public Inquiry takes place.

If any bank really wants to leave LINK, rather than demanding arbitrary cuts to interchange, they should simply and transparently inform their customers that they wish to do so. There is little doubt what the reaction of those customers will be and, with Account Switching in the UK now guaranteed to take only 7 days, the first bank to announce their desire to leave LINK may well have a very unpleasant surprise.....


Comments: (5)

A Finextra member
A Finextra member 12 February, 2018, 06:37Be the first to give this comment the thumbs up 0 likes

Maybe you can comment on why the independent ATM operators so aggressively push the option to "check your balance FREE!" and often ask two or three times per transaction if you'd like to do so? I've never seen that on a bank owned ATM. I'm sure it's just because they are concerned for individuals financial management...

I disagree with your vision of what a cashless society would look like. Surely there are significant societal benefits to reducing cash usage? It would help in eliminating tax avoidance, the black market economy, and various forms of money laundering. don't seem to have discussed the option of ATM operators (be they independent or otherwise) charging a fee for their service. If LINK interchange is not sufficient to cover the costs + a reasonable margin, can they not simply charge a transaction fee to withdraw cash? This certainly seemed to be an acceptable option for independent ATM operators 5-10 years ago when £1 or £1.50 charges to withdraw £10 were not uncommon.

Ron Delnevo
Ron Delnevo - UK Cash Supply Alliance - Leatherhead 12 February, 2018, 07:231 like 1 like You are concerned about an option being pushed? It remains an option, pushed or not. That is what I support, not the limiting of options that would brought about by bank branch, ATM and cash deserts. As regards the merits of a cashlesss society, Cash is the cheapest payment for retailers to manage ( the British Retail Consortium, which represents 80% of major retailers, produce figures showing this each year). So there would be no direct cost benefits from going cashless. As regards, tax evasion and other crimes, there are 5 Billion regular users of cash on the planet. All forms of crime that are sometimes associated with cash are tiny by comparison with the legal uses made by those 5 Billlion. The crimes of a few should not lead to the punishment of the many. Finally, you seem to advocate Independent ATM operators charging for cash withdrawals? You will be happy to learn then that there are 15,000 pay-to-use ATMs in the UK. That’s more than 20% of all ATMs in the country. However, only 2.5% of Cash Withdrawals are made at those ATMs. Unsurprisingly, the UK public prefer to get cash without a direct charge at 55,000 free-to-use ATMs. The real problem in the UK is that banks pretend that banking can be free, part of which entails providing free ATM transactions. Banks themselves could lead the way by making reasonable charges for all services, instead of cross-subsidising “free” banking for 80% of their customers by heavily charging the 20% who face high overdraft and credit card charges and penalties. I recommend the book “Naked Banking” for a full exposition of such matters.
A Finextra member
A Finextra member 12 February, 2018, 08:41Be the first to give this comment the thumbs up 0 likes

As you say, people prefer to use "free" ATMs, except of course they are not free, the cost to use them is just not totally transparent to the customer. I would much prefer the charade of "free" banking was replaced by fair and transparent charges for all forms of transactions. If banks wished to bundle a certain number of ATM transactions per month as part of an account package, also fine. Slapping "this ATM is FREE to use" and "Check your balance for FREE" all over non-bank ATMs doesn't help of course...because as we agree, it isn't really free!

My points about tax evasion associated with cash are surely valid! It's not about demonizing the majority, it's about fixing a problem. Paying for goods or services with cash is the easiest way to avoid any visibility of the transaction to the authorities. Tax evasion via such means is a huge problem for society, regardless of what percentage of society is responsible for it.

If your concern is really about financial inclusion, surely the best solution to the forthcoming "ATM desert" would be a not for profit organisation (or maybe even LINK themselves) to be mandated to ensure ATM availability in any areas where the banks can not or will not provide them? Independent ATM operators would be free to compete on a commercial basis with open and transparent charges. Given the supposed huge preference for cash, people will not mind paying the actual costs of providing it instead of using alternative electronic payment methods.



Ron Delnevo
Ron Delnevo - UK Cash Supply Alliance - Leatherhead 12 February, 2018, 08:56Be the first to give this comment the thumbs up 0 likes We agree on the first point. As regards tax, avoidance by big business and the super rich who control much of the worlds wealth is the REAL issue. Politicians won’t deal with it because it is too difficult and/or the “avoiders” are there supporters. Finally, there could be an argument for ALL ATMs charging, say, 50p for a cash withdrawal, with specific cardholder being exempt from charges at ANY ATM. However, almost certainly politically unacceptable at the moment.
Paul Love
Paul Love - Konsentus - Nottingham 12 February, 2018, 11:34Be the first to give this comment the thumbs up 0 likes

This is a well researched article and while there may be disagreements about the eventual outcome, it does raise some important principals about the impact of the reduction on the wider community.

A few years ago there was talk of ending cheque payments, which was eventually shelved due to an orgainised campaign by some of the largest users and bebeficiaries of cheque payments

At the moment there is no obvious organised group representing the cash users in our society to mount an effective campaign against such changes.


Ron Delnevo

Ron Delnevo


UK Cash Supply Alliance

Member since

18 Jan 2018



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Financial Inclusion

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