As ATMs continue to serve as the primary access point for cashMoney in physical form such as banknotes and coins. More, the sustainability of the current business model supporting ATM networks is coming under increasing scrutiny. At the recent ATMIA Europe and Emerging Markets 2024 Advocating for Cash, ATM Security, and PaymentA transfer of funds which discharges an obligation on the part of a payer vis-à-vis a payee. More Choice Conference in London, industry leaders gathered to discuss the critical need for reform in the domestic ATM interchange feeA fee paid between banks for the acceptance of card-based transactions. For instance, a merchant’s bank (acquiring bank) will pay an interchange fee to the cardholder’s bank (issuing bank) when the latter makes a transaction. This is also the case when a cardholder uses an ATM: the cardholder’s bank pays a fee to the ATM operator. More structure.
A panel of key industry representatives highlighted the misalignment between stagnant interchange fees and rising transaction costs. These fees, primarily set by International Card Organizations, have not been adjusted to reflect inflationary pressures and other changes impacting the ATM industry, making it increasingly difficult to maintain viable ATM networks. Research from the University of Warsaw was presented showing the effects of this imbalance, particularly in Poland, where outdated fee structures threaten the viability of ATM networks in lower-volume locations.
Currently, domestic transactions are subject to interchange fees, which are designed to compensate ATM deployers for operational and provisioning costs. However, despite significant changes in the economic landscape, these fees have remained largely unchanged for years. This stagnation poses a threat to the sustainability of ATM networks, particularly in locations with lower transaction volumes.
As governments across Europe recognize the critical importance of cash access for both citizens and businesses, the role of ATMs has never been more crucial. Recent studies, including the European Central Bank’s SPACE report, confirm that cash remains a significant payment methodSee Payment instrument. More in many regions. However, with bank branches closing and ATMs no longer seen as a strategic priority by many financial institutions, independent ATM deployers (IADs) are playing an increasingly vital role.
Yet, as inflation drives up operational costs across the ATM value chain—particularly in cash logisticsThe term originates from military language and refers to the movement and provisioning of troops at war. In today’s business vocabulary, it refers to the management in particular, the transportation, storage and distribution of finished goods. More and maintenance—average transaction volumes per ATM are declining. This imbalance between revenue generated by transaction volume and costs that are more closely tied to the value of withdrawals is leading to financial strain on ATM deployers.
The ATM Industry Association (ATMIA) is calling for a reassessment of the domestic revenue model, specifically the interchange fee framework. It is essential to adapt this model to reflect the current realities of consumer behavior and rising operational costs. Without reform, the industry risks an unbalanced deployment of ATMs, focusing on locations with higher cross-border transaction revenues, rather than ensuring broad access to cash, particularly in remote areas.
Some countries, including France and the Netherlands, have already taken steps to address this issue by increasing domestic interchange fees. ATMIA urges International Card Organizations to accelerate similar changes across Europe, emphasizing the need for a consistent approach to ensure the long-term viability of ATM networks.
The current environment presents significant challenges for ATM deployers as transaction costs continue to rise while interchange fees remain unchanged. It is important for all stakeholders—industry, regulators, and card networks—to collaborate on developing a sustainable model that ensures ATMs can continue to provide essential cash access, especially in underserved and remote areas. Revisiting the domestic interchange fee framework is a necessary step in maintaining the viability of ATM networks.
Lonnie C. Talbert, CEO of ATMIA
The domestic interchange fee model remains a unique case where external entities, such as card networks, set the fee levels without input from the ATM deployers themselves. This paradox must be addressed, as it significantly impacts the deployment and maintenance of ATM infrastructure.
ATMIA also recognizes that while introducing domestic surcharge fees or direct access fees (DAF) could offer an alternative revenue model, this option is not universally applicable across Europe due to regulatory constraints.
As the demand for cash remains strong, ATMIA stresses the urgent need for a revenue model that ensures ATMs remain a sustainable and accessible service for all.