Starting July, the UK’s largest free-to-use ATM network, LINK, will lower its interchange fee from 25 pence to 20 pence. The network is also planning on reducing its fleet by 20% in the coming four years. Critics see this as a scheme to push UK consumers to make greater use of cards, for the benefit of Visa, MasterCard and banks eager to cut costs even further. Banks have already taken radical measures over the past couple of years by closing over 1,700 branches across the country.
Although LINK explains this decision by citing a lowered interest for cash, numbers tell a different story. In fact, until April of last year, 76% of transactions in convenient stores were made in cash according to the Association of Convenience Stores report. Furthermore, cash demand grew by a record 10% in 2016, indicating that there is still a general appreciation for this tangible payment method by UK consumers.
Executive Director for the ATM Industry Association in Europe Ron Delnevo is critical of the plan to lower interchange fees in the UK as they are already the lowest in Europe. “Ten years ago it [interchange fee] was nearly 40p, now it’s about 25p. Our ATMs continue to be twice as busy as ATMs in France, and almost twice as busy as Germany”, says Delnevo for PaymentsSource [paywall]. He believes this is simply a strategy for banks and credit card companies to increase profits to the detriment of business and consumers.
There is fear that ATMs will start charging for withdrawals, which would undoubtedly affect the poor and rural communities. Indeed, in some villages, local authorities have had to take action and seek other solutions, as in the case of Blaenau Ffestiniog where residents were able to mobilise to get a Cardtronics ATM installed.
LINK spokesman Graham Mott explains the move as a need to increase efficiency and make ATMs available in places that have recorded the most activity. He also assures that ATMs in remote communities will be subsidised to continue to offer access to cash in these communities.