High Streets Initiative · 1 February 2018

ATM network funding cut condemned by small businesses and MPs

Business groups have warned a funding cut could cause mass closure of free-to-use ATMs

Britain’s largest ATM network has confirmed proposals to reduce funding for cash machine providers, leading to condemnation from politicians and small business groups.

Following a consultation, the LINK network will reduce the “interchange” fee, the transacation cost covered by banks, by 5p over the next four years, starting with a 1p reduction from July 2018.

The fee is currently set at 25p, and consumer watchdogs, business groups and MPs have all warned that a funding cut for cashpoint providers would inevitably reduce the number of free-to-use cash machines across the UK, and hit communities already suffering from the loss of physical bank branches.

A recent report from watchdog Which? highlighted the 123 UK postcode districts, with a combined population of 110,935, where there currently isn’t a single ATM, causing consumers and business owners to rely on neighbouring communities for cash.

Echoing the findings of the study, Mike Cherry, chairman of the Federation of Small Businesses (FSB), said LINK’s proposals would exacerbate the situation.

“Access to cash is absolutely vital to local growth in rural and deprived communities. Too often we hear of towns running out of cash because current cash point provision simply isn’t good enough,” he said.

“Consumers and small firms have already been hit by thousands of bank branch closures in the last few years. Now, our cash machine network is under threat.



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To maintain a presence of free access, LINK has exempted all ATMs one kilometre or more from the next free machine from any reductions in fees.  Cherry went on to say: “We’re not convinced that today’s announcement includes enough protections for vulnerable communities.”

“There’s no guarantee that having everyone within a kilometre of a cashpoint will be enough to meet demand. Equally, we need to question whether it’s right to make vulnerable ATM users travel a kilometre every time they need cash.”

Cherry urged the Payment Systems Regulator (PSR) to halt the proposals and conduct its own review.

The Treasury select committee of MPs had raised similar concerns regarding the impact on rural communities. Commenting on LINK’s announcement, committee chair Nicky Morgan said any reduction in free access to cash would be an “unacceptable” outcome.

She added: “This will be the first major test for the PSR. They must ensure that customers do not lose out as a result of LINK’s proposals.”

Speaking for Britain’s local shopkeepers, James Lowman, chief executive of the Association of Convenience Stores (ACS) said a loss of free-to-use ATMS would further reduce access to cash in rural areas.

He said: “We welcome the interest shown in this issue by the Treasury select committee…and we will continue to work with the committee, other parliamentarians and the government to ensure that we maintain the provision of cash to all types of communities.”

A National Post Bank has been touted as the antidote to branch closures for small firms

This article is part of a wider campaign called the High Streets Initiative, a new section of Business Advice championing independent and small retailers by identifying the issues that put Britain’s high streets under pressure. Visit our High Streets Initiative section to find out more.

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Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.