If it wasn’t bad enough that bank branches are closing at an alarming rate (see our blog article from February of last year) banking customers have just learnt that literally thousands of free-to-use cash machines could be closed because of a cut in the fee that operators receive from banks each time an ATM is used.
The move is an attempt by Link (which
oversees ATM machines) to encourage operators to place the machines in more
remote areas. But the ATM industry body has said that this would see up to
30,000 ATMs disappear altogether.
According to Link the fee that is
paid (known as the interchange rate) will be reduced from 25p to 20p per
withdrawal, in annual steps over four years, to protect the network. However, the fee will be unchanged for
free-to-use ATMs which are a kilometre or more from the next nearest cash
machine.
The cut in the fee will take effect on 1st July this year. The situation will then be reviewed every
year to assess its impact on customers.
Link said that the move would
"shift the incentive" for operators, which have been clustering ATMs
in city centres, to move some to rural and less affluent areas. An extra
subsidy of 10p per withdrawal, currently available to 300 ATMs, will be tripled
to 30p for some of the cash machines in more remote areas with little access to
cash machines.
John Howells, the CEO of Link, said:
"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."
But the plans have been heavily criticised
by the industry and some consumer groups. Ron Delnevo, Director of the ATM Industry Association said that the current network of 55,000 ATMs was
"providing financial inclusion everywhere."
"To lose any of them would be a
disaster, but we will lose 25,000 to 30,000 from these measures if they are
allowed to go ahead, which they should not," he said.
Consumer group Which? said the move
could lead to "mass closures" of free-to-use machines, adding to the
200 communities in Britain that already had poor ATM provision, or no cash
machines at all.
Mike Cherry, Chairman of the
Federation of Small Businesses has called for a full public consultation on
the plans. He said that the proposals didn’t include enough protection 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.”
Nicky Morgan MP who chairs the House
of Commons Treasury Committee, has also expressed concern over whether there
will be an even spread of ATM machines across the country. The Customer Service
Blog will be keeping a close watch on how the Government reacts to this development
and will be reporting back when we have more details.
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