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Slashing interchange fees: another defeat for UK’s poor

Categories : Uncategorized
December 20, 2017
Tags : ATM, Consumers, Costs of payments, poverty, United Kingdom
Lowering interchange fees could be disastrous for rural communities in the UK, already hit hard by bank closures.
Viktoria Dijakovic

Rural and remote areas of the UK might soon have even greater difficulties at accessing banking services. After already suffering a 53% decrease in bank branches since 1989, the ongoing debate of the Link ATM network might result in nation-wide ATM overhaul.

Indeed, already back in November 2016, Link announced its desire to rationalize costs as withdrawals at certain ATMs have been declining. In January 2017, Link members convened an emergency meeting to review these costs and discuss the future of the country’s 70,000-strong ATM base. The network runs on a £900 million a year budget to maintain free-to-use cash machines around the UK. Nevertheless, if these machines are free for consumers, they actually incur costs for card issuers (i.e. banks).

As a result, Link is suggesting lowering the costs per transaction for card issuers from 25 pence to 20 pence, but there is a generalized fear that this could lead to 10,000 out of the UK’s 55,000 free-to-use ATMs being shut down. The government has been closely monitoring these developments in order to understand what the implications of these changes will be for consumers.

Cardtronics, the Kingdom’s largest independent cash machine operator, stated that: “Should Link’s proposals to slash interchange be implemented in their entirety, the free-to-use ATM model in the U.K. will become unsustainable and Cardtronics U.K. will be forced to convert a much more significant number of currently viable free-to-use ATMs to pay-to-use or even remove ATM sites altogether.”

ATMIA Europe’s Executive Director, Ron Delnevo, is worried about how rural communities will be affected by such as decision: “We are very concerned. Many communities have lost their High Street banks and now they are being faced with losing access to free cash machines.” He then adds: “It will hit the poorest hardest.”

A final decision should be reached next month. “Regardless of any wider changes to interchange, it [the Link board decision] will protect all free-to-use ATMs which are a kilometer or more from the next nearest free-to-use ATM.” But the watchdog group Which? has already prompted the government to examine the situation and take action accordingly.

The UK has one of the highest density of ATMs in Europe, making access to cash easy for consumers.