Link maps out interchange reduction plans

UK ATM network operator Link is to introduce a phased reduction in interchange fees paid by banks in a move that could see tens of thousands of cash machines disappear from the high street.

The well-trained measure will see the interchange rate reduced from 25p to 20p per withdrawal, in annual steps over four years. Link's hand has been forced by major high street banks who have balked at the costs incurred every time a customers uses a non-branch machine at another bank.

In a nod to consumer concerns about the creation of 'cash deserts' in some areas, Link says all ATMs one kilometre or more from the next free machine will be exempt from any reductions in interchange. An enhanced subsidy of up to 30p (tripling the current 10p) will be paid wherever needed to ensure that free ATMs remain in areas that could not otherwise sustain them.

John Howells, chief executive of Link says: “Link is committed to protecting free access to cash. The UK has a near record number of ATMs, yet the recent growth has led to the majority of these being placed in busy areas where there simply is no need for a new ATM. The combination of a reduction of the interchange, with the significant strengthening of the Financial Inclusion Programme, will begin to rebalance the network, making sure we protect and install new ATMs in locations that really need them.”

The plans have been rubbished by consumer campaigning group such as Which?, who are calling on the Payments Sytems Regulator to conduct an urgent market review.

“While Link is claiming it wants to maintain free access to cash, we’re concerned about its ability to do so, not least when it is facing a clear threat from banks to leave the network," says Which? money expert Gavin Shaw. “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."

Link maintains that it will do whatever it takes to retain free access to cash for all communities, conducting a country-wide monitoring programme and using powers bestowed under its Financial Inclusion Programme to avoid the creation of cash-free areas.

Tracey Graham, independent chair of the Link Consumer Council welcomed the commitment: “I am very pleased to see Link is significantly strengthening its Financial Inclusion Programme. This will help protect existing ATMs and ensure consumers in remote and rural areas will still get access to the cash they need.”

Related Companies

Link Interchange Network

Channels

Retail banking Payments

Keywords

Cards Automated teller machines and network services

Comments: (2)

A Finextra member 31 January, 2018, 20:59

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0 likes So ironic that the banks that offloaded much of their own ATM estate are the ones now demanding the reduction! Still, in some areas there are too many ATMs so this new balanced proposal should appease (almost) everyone.

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A Finextra member 01 February, 2018, 10:48

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Natural that the card issuers want to pay less to Link for atm withdrawals. 20 p is still expensive compared to a pos payment with a debit card where the issuer receives 0,20% of the payment value from the acquirer instead of paying 20 p to Link. Normally regulators take the opinion that the user of a service - debit card holder - should pay for the service to the provider in order to be able to make an informed choice on what service to use. This was also the main reason for the reduction of the pos payment interchange fees on the consumer cards in the EU from 2016. In atm cash withdrawals authorities instead demand "free of charge for consunmer" atm:s. The "free of user fee atm:s" distort the competition between cash and other means of payment and causes the issures of cards to overchange bank customers for other services and helps keep the underpriced cash as a major payment means thus also aiding tax avoidance and fueling the criminal economy. All because politicians lack the guts to stand for their own principle of "user pays" since the change could anger cash using consumers / voters. In a normal world Link should not be able to "tax" banks/issuers at all but would ask to be paid by the user at withdrawal and banks/issuers could compete with each other by offering free cash withdrawals - if they want to.