The cut in fees could lead to a reduction in the number of ATMs, ACS has warned

A cut in the fees banks pay to operators of free-to-use ATMs for accepting card transactions from all card issuers has led to condemnation from the convenience store sector, which fears it will lead to a reduction in the number of cash machines.

Link, which manages the UK’s main ATM network, confirmed a phased reduction in the fees banks pay cash machine operators for allowing customers to use the service - known as the interchange rate.

The intention is to implement a phased reduction in interchange from 1 July in order to achieve a 20% cut in fees after four years comprising four annual 5% reductions, subject to annual review.

It could also mean a reduction in the fees, retailers earn from the likes of Cashzone and NoteMachine, depending on their contracts with the machine suppliers.

“Banks have been cutting back their own branch networks, and now they are reducing the interchange fees that fund the network of ATMs provided by retailers and private companies in places that banks have abandoned,” said ACS chief executive James Lowman.

“We are concerned that this will lead to a reduction in the number of ATMs, and their reach and accessibility for all types of communities.”

Link countered, however, that a strengthened Financial Inclusion Programme would ensure all communities retained free access to cash and it would do “whatever it takes” to retain free access to cash for all communities.

All existing free ATMs that were at least 1km away from the next free ATM would be exempt from interchange reductions.

And the existing 10p premium, which is paid wherever needed to ensure free ATMs remain in areas that cannot otherwise sustain them, would rise to 30p, Link said.

Lowman said: “We are not convinced that the measures to support isolated ATMs go far enough, and we will be monitoring closely the impact of the reduction in interchange fees on cash machines hosted by our members.”

He said the ACS would continue to work with the Treasury Select Committee led by Nicky Morgan MP, other parliamentarians and the government to ensure provision of cash to all types of communities was maintained.

According to the ACS 2017 Local Shop Report, 58% of stores in the convenience sector had a cash machine, 45% of stores provided a free-to-use cash machine, and 13% had charged cash machines.

“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,” said Link chief executive John Howells.

“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.”