Banks offered big bucks to sell off remote ATM networks

Banks offered big bucks to sell off remote ATM networks

Independent ATM operators are approaching banks and offering to buy remote cash machines in a bid to expand fee-charging networks, according to UK building society Nationwide.

Speaking at the Treasury Select Committee hearing into fee-charging ATMs, Stuart Bernau, executive director at Nationwide, told MPs that the society had received a letter from a fee-charging operator wanting to buy its remote ATM network.

He also claimed that independent operators are involved in an aggressive battle to expand their networks and are offering financial incentives to site owners if they drop free machines and switch to fee-charging ATMS.

HBOS sold off 814 off-site units to independent ATM operator Cardpoint last year for £75 million. Cardpoint has since converted 250 machines to its fee paying model, which charge customers around £1.60 for making cash withdrawals.

At the hearing Bernau challenged claims by HBOS chief executive James Crosby that although the number of fee-charging machines would soon exceed 50%, the units are unlikely to account for more than five per cent of all ATM transactions.

The society says growth in free ATMs is at a virtual standstill and the number of free remote units actually fell in 2004. The overall number of free ATMs has only been maintained because of the increase in branch-based machines — which is a consequence of branch automation. Consequently, the geographical coverage provided by free machines has fallen. He cites the US as an example, where 20 years ago most ATMs were free but now 95% of machines charge and 40% of transactions incur fees.

"The suggestion that only five per cent of cash machine transactions will ever incur a fee is a misconception. Experience from the US illustrates that it could go much higher. The rising number of charging machines has serious social consequences," says Bernau.

Stephen Timms, financial secretary to the treasury, dismissed concerns that more people are being charged for withdrawing cash and claimed that the current balance between free and fee-charging machines was working well.

Timms said he was satisfied with reassurances from banks that they will maintain free ATM networks.

It also emerged at the hearing that three quarters of ATMs located in UK post offices charge customers around £1.50 for making cash withdrawals. In total, customers are charged £10m a year for using cash machines located in post office branches.

John McFall, committee chairman, noted that while most banks still provided free ATMs, the post office seems to be the only financial institution going in the other direction.

The post office, which provides basic banking services that allow customers to access benefit payments at branches, claims it makes no profit from the machines and that all face-to-face transactions in its branches are free.

Research released by the Nationwide in December shows that customers are paying £140 million a year to withdraw money from ATMs, 133% more than on the previous 12 months.

Nationwide has called for clearer labelling on fee-charging ATMs, including a 30-day warning notice when a free ATM is replace by a charging model. Nationwide also wants the introduction of a code of practice for cash machine operators in order to avoid government-imposed regulations.

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