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Designing a less-cash, not cashless, future for the UK

In 2018 LINK, the network which connects all cash machines in the UK, announced plans to cut the fee that banks pay for cash withdrawals by 20%. We warned at the time that this would have a disastrous - and potentially terminal - effect on people’s access to cash across the country.

Our warnings were ignored and LINK implemented two 5% cuts in 2019. They claim that the cuts were designed to reduce the over-supply of ATMs in urban areas, where people have their pick of free cash machines. But the figures released by Which? recently are conclusive evidence, if it were needed, that LINK’s strategy has failed to deliver. Instead, the cuts have netted the banks a staggering saving of £120m, while their customers have found it increasingly difficult and costly to gain access to cash. This is just simply not good enough.

John Howells, LINK’s CEO, would have us believe that the sole reason ATMs are being removed and fees are being introducing is as a result of the decline in cash usage which is driving fewer people to need a local cash machine. This only tells half the story. In reality, it is the cuts to the interchange fee more than anything else that have had a hugely negative impact on the UK’s world leading ATM infrastructure. LINK has deflected criticism by promising to continue to protect free access to cash.

The cuts left many ATMs economically unsustainable, and left operators such as Cardtronics with the difficult decision to either introduce a fee on these machines or remove them altogether. An important point to note is that when you are charged for an ATM withdrawal the bank pays nothing  to the ATM operator, making it a win-win for the banks and, by default, passing the cost of service provision on to their customers. This is effectively removing consumer choice and is accelerating the move to a cashless society for people who now have no alternative.

The most worrying aspect of this is that rural communities are being disproportionately affected by the cuts. In fact, Cardtronics’ own data shows that rural and suburban areas have seen two thirds (66%) of the ATM closures over the last two years. Considering banks are withdrawing from the local high street, shouldn’t they be supporting independent ATMs, which fill the void that closed branches leave behind? Instead, the cuts have left those most in need of free access to cash without any local physical touchpoint for banking services, and having to travel further afield for cash.

It’s not just ATM operators who have raised concerns. The Association for Convenience Stores, the University of Bristol and others have also called for a restructuring of interchange. We are supportive of LINK’s recent schemes designed to “protect free access to cash for all”. This includes enhanced interchange for free ATMs where there are no others within 1km, and the Request an ATM scheme, which allows communities to request a free ATM where there are none. 

While these steps are positive, they are nowhere near enough to achieve LINK’s objective when faced with the scale of the problems that the banks have engineered. LINK has only commissioned 20 new ATMs since the launch of the Request an ATM scheme in October 2019, despite the closure of 8,700 machines since the first wave of cuts in January 2019.

We are told that cashback is the answer. It is not. Based on figures from UK Finance we estimate that well over £150bn was dispensed from UK ATMs in 2019. So it is easy to see that retailers cannot feasibly provide a replacement for an effective ATM infrastructure. Moreover, the proposed broadening of cashback provision simply transfers the burden of cash access onto retailers who will need to hold additional cash in their tills, with all the inherent risks that brings.


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