/ Money

Free cashpoints: can they really take them away from us?

Cashpoint

We recently discussed the possible closure of around 10,000 of the circa 70,000 free cashpoints around the UK. Many of you shared your concerns about this so we’ve called on the Payment Systems Regulator to investigate…

Link, the UK’s cash machine network, whose members include all the main debit card providers, is proposing to cut interchange fees by 20% over the next four years.

The consequence of this fee change is that some cashpoint providers could either remove cash machines because they’d no longer be profitable, or make up the loss by charging you to withdraw money.

We discussed this potential cashpoint crisis last month and a number you shared your concerns about this, John Peverel-Cooper told us:

As a registered disabled person and 87 years old, the length I can walk is limited. Any general reduction in the number of easily accessible ATMs will affect me considerably.

So we’ve raised our concerns with the financial regulator, the Payment Systems Regulator (PSR). This week I wrote to Hannah Nixon, the Managing Director of the PSR.

Letter to the PSR

Dear Hannah

Which? has read with interest LINK’s proposal to reduce the level of its interchange fee which funds the free-to-use ATM network. We have significant concerns about the impact of its proposal for consumers and do not believe that they should be allowed to proceed without sufficient scrutiny from the regulator. Which? is therefore calling on the Payment Systems Regulator to conduct a wider market review of the use of the LINK, Mastercard, and Visa payment systems that takes into account other critical factors associated with the provision and use of cash.

Which? is concerned by LINK’s assumption that consumer demand for cash is in decline and that overall numbers of free-to-use ATMs should necessarily reduce. The Bank of England has stated that the total demand for banknotes increased by 10% last year, its fastest growth in a decade, and that the total value of cash spending in the UK and the aggregate value of ATM withdrawals has stayed relatively stable over the past decade. Cash remains the most widely used payment method in the UK, and is still the preferred payment method for many – 2.7 million people in the UK rely almost entirely on cash. A significant reduction in the number of free-to-use ATMs, leaving consumers without easy access to their money free of charge, would therefore have a clear impact on consumers.

While we welcome LINK’s commitment to the interests of consumers and to the wider public interest, its proposals appear to be driven by industry pressures, in particular pressure from banks to cut costs, combined with a possible lack of a level regulatory playing field between LINK and rival ATM schemes.

LINK’s consultation focuses on the level of the interchange fee. However, the setting of interchange fees raises complex policy and competition law concerns. Which? is concerned that the consultation states that LINK’s interchange methodology – previously explicitly approved by competition regulators – results in an uncompetitive interchange fee. Regulators have long recognised that interchange fees are not a normal competitive price. Interchange fees in Mastercard and Visa’s credit and debit payment schemes have been subject to longstanding competition and regulatory concerns and are now directly regulated by the EU Interchange Fee Regulation. In 2001, the OFT found that LINK’s interchange fee was anti-competitive, but approved it on the condition that LINK members set it at the level of the average ATM costs of participating members, as determined by an independent study. While the OFT decision may have formally expired, the same principles and competition law still applies. The PSR is best placed to subject LINK’s interchange fee to proper regulatory scrutiny.

Furthermore, LINK’s proposals cannot be considered in isolation from questions about wider market factors. Any decision should take into account potential alternative options for accessing cash and the wider landscape of the provision of banking services, as well as an assessment of the level of effective competition between alternative ATM schemes and payment service providers.

Finally, it is vital that the lessons are learnt from the Payment Council’s decision in 2009 to abolish cheques, which raised similar public policy and competition issues, particularly since cash use is much more significant and widespread than the use of cheques. Furthermore in light of the ongoing reduction in banks’ branch networks, these proposals must not send a signal that the industry has permission to reduce the ATM network in the future as they deem necessary.

Given that the PSR has responsibility for promoting competition, innovation, and the interests of payment-users of all the major UK payment systems, including LINK, Mastercard and Visa, it is well placed to conduct the review we propose. In light of the concerns that Which?, the Treasury Select Committee and other organisations have raised about the current proposals, I urge the PSR to not allow LINK’s current proposals to proceed before such a review.

I look forward to meeting in the New Year to discuss these issues further.

Yours sincerely

Caroline Normand
Director of Policy

Next steps

We now await a response from the PSR. In the meantime tell us, how often do you withdraw money from a cashpoint? Would you pay to withdraw your money?


Comments

Welcome home.Wavechange, I am sure the break from Which Convo has refreshed your mind, (and indeed your lungs also in your case with invigorating highland air) and your spirit with the hospitality of it’s lovely people.

Thanks Beryl. My family are wonderful hosts but live far too far away. I arrived home with norovirus but am recovering. Let’s hope that 2018 is a good year for all of us.

My sympathies Wavechange, I contracted the same virus in the days on the run up to christmas and it robbed me of my appetite, 90% of my energy and the will to live for a few days! Rest and a bland diet seems to be the recommended antedote – but I’m sure you are already all too aware of that 🙂

A few of our friends have had that, too, and it doesn’t sound at all pleasant. Glad to see you’re both over it.

Cash points (ATMs) were introduced by the banks to help them cut costs by reducing the need for so many front office staff. Now the banks want to remove these cost cutting devices, so will they be increasing their front office staff?
I for one will go back to withdrawing my money over the counter but that is not a solution for every one!

Why have you not mentioned that anyone can withdraw cash without charge at Post Offices – and there are Post Offices in almost every village. There are now few bank/building society accounts that the PO cannot process – so how necessary are ATM machines?

John, this has been stated on the previous page, as has the cash back facility from shops. There are other ways of obtaining cash than from ATMs, as you say.

According to the Post Office website our village Post Office does not provide cash, maybe because there is a free ATM in the shop. I intended to check but the Post Office counter was closed last time I visited.

https://www.postoffice.co.uk/branch-banking-services
Branch Banking – Personal Accounts
Access your high street bank account at any of our 11,500 Post Office branches
A free service to pay in, withdraw and collect

Where do you live John Moon? There are now very few post offices, villages or not. Also, has no one thought that, in the case of banks owned by RBS, 75% or thereabouts are owned by us, the taxpayer. These banks are not working in our interests and they should be.

House of Commons briefing paper 02585 (Jan 2018) says there are currently 11,659 post offices in the UK and 93% of the population live within 1 mile of a post office. It is true that the no. of offices was drastically reduced up to 2009, but the network has stabilised since then and the PO is now required by government to maintain it.

Where on earth do you get the idea from that most villages have Post Offices? They have been closing down rapidly over the past few years.

I’m disabled. Two of our nearby banks and ATMS have gone recently. I have to get a taxi, at huge expense, to find an ATM. Otherwise I rely on my local M & S store’s cash machine but it invariably runs out of money by early afternoon at the weekends when I do my shopping.
Please think of the disabled. We need nearby cash machines.

Wages pensions etc get paid into bank accounts these days why the heck shoud we have to pay to get our hard earned pay out of the atm it is not acceptable and we need more of them not LESS.its not conveniant to pay for everything with plastic my window cleaner wouldn’t accept payment with a plastic card for a start. With banks closing down on a regular basis these cash machines are very much needed and should be free to use..

Cash machines or other means to withdraw cash are needed. But if they cost an independent provider to operate I cannot see how the user should avoid payment. The options are to get cashback, draw sufficient cash out of the bank or the many free ATMs, or visit the Post Office to cover needs between visits, use a debit card… It requires forward planning for some.

John S Emerson says:
23 January 2018

The Banks, together with most of the public sector and utilities are supposed to offer customer service. It is increasingly obvious that this is no longer so. Banks are closing branches everywhere and now we are told that the ATM’s are going as well.
They are only interested in capturing our money, giving little in return and penalising us if we want your money back, whilst the fat cats sit back and enjoy their huge salaries, bonuses and commissions. The banks are a disgrace. It is all part of a long term plot to abandon cash, make us use credit cards, for which once again they will charge us, and bank online, which is obviously becoming less secure by the day

I have never understood why town centres are littered with cashpoints, while in rural areas the banks are allowed to close branches and remove the cashpoints when they leave. It should long ago have been compulsory for departing rural branches to leave a free cash point behind when they left. Once again an example of toothless regulation. Near us, 3 banks have closed their branches and removed the cash machines. There is now just one in a market TOWN and it’s at the Co-op. Recently in Conwy 10 mIles away all the banks moved out, and took ALL the cash points. This too a popular town flooded with tourists in the season. There is a crazy distribution of free machines. I think the regulator needs to make sure all communities have access to a machine within walking distance. Either that or pull their finger out and get on with a cashless society. I for one do not agree with the banks profiting from branch closures while not compensating customers with adequate banking cover. Same with cash, don’t reduce supply until people stop using it. Until you can pay your window cleaner, and tip restaurant staff directly with something else we’ll all need free cash.

Wages pensions etc get paid into bank accounts why should we have to pay to withdraw are hard earned cash from the atm you cant pay with plastic for everything my window cleaner wouldn’t accept payment with plastic for a start. With bank’s getting closed down on a regular basis these days we need more atms not LESS. And should be free to use..

Yes get rid of the cashpoints just as soon as you bring back our local bank branches.

As banks pay their executives/shareholders massive amounts in bonuses, and pay the account holders a pittance, and remember this is your money that they generate millions in profit with. I would be of the opinion that the banks should gladly pay the transaction fees, if not then force them, banking is one of the most despicable, self serving institutions on this planet.

They pay the running costs of their own machines and they give you free banking. However they don’t, in my experience, pay “massive amounts” to shareholders – at least not for the couple I have a few shares in. Executives in many industries, public bodies and…yes…charities get paid large amounts, as do “celebrities”.

It is high time that the need for companies that provide important services for the public were required to take account of public need. Many of us would not like to lose our local buses or other services if companies decided to focus on more profitable services.

If there is a social need for ATMs, bus services, and suchlike that are unprofitable then they can be funded by local taxes. I do not see a very small fee to fund a privately operated ATM as unreasonable given the convenience it provides. A bit like a village shop that is convenient but more expensive than the more distant supermarket.

I have no problem with a very small fee but ATMs that I have seen charge £1.50 or £1.99.

Link’s statement on charging: https://www.link.co.uk/consumers/charges/
Link are cutting their bit – 25p – by 20% over 4 years I understand; that looks like 5p to me. I cannot see how this would grossly inflate private ATM charges, but perhaps Which? have surveyed existing charges so we can see how they vary. I think a small fee is reasonable given the convenience of a cash-withdrawal point. But how many faced with this do not have a post office that gives cash out, or a cashback shop? Just how big or small a problem might it be?
I presume the fee is fixed per transaction, so taking out enough cash to last a while might make a £1 fee say worthwhile. Alternatively, on a shopping visit to an area with free cash withdrawals, top up.

I presume that the expensive ATMs (e.g. those in motorway service areas) are not run under the Link scheme. Like premium rate phone numbers, something to be avoided at all costs.

LINK is the UK’s largest cash machine network
Effectively every cash machine in the UK is connected to LINK, and is the only way banks and building societies can offer their customers access to cash across the whole of the UK.

All the UK’s main debit and ATM card issuers are LINK members.

I don’t know how you could access your bank account to withdraw cash if the above is true. But maybe someone can help? Do any ATMs operate using credit cards (if I remember rightly, my credit card attracts a 2% fee if used to effectively provide cash, like buying a lottery ticket say).

Speaking today to a hall full of pensioners take the ATMS away, we will take our monies out of the banks and would rather risk taking it all out. It’d been done before and can be done again.

Andrew says:
23 January 2018

Banks and large retailers don’t like us using cash – they don’t get any indication of how we are spending our money and the sort of data we provide with debit cards is what banks and shops love as it’s very valuable and a saleable commodity in today’s economy. So withdrawing cash machines is for them a good idea and not just to save the maintenance costs.

Not only do they not like us using cash, but they would also like us to give up cheques. Didn’t succeed recently, but I am sure they will be trying again soon……….

My husband and I are both disabled with mobility problems. I can no longer drive, and relie on my husband to go out on his small mobility scooter to get cash. He needs help with using a ATM due to several medical issues. We need cash to pay a gardener, also paying for mini cabs the shortest journey is £5 each way plus a tip. Withdrawing the LINK system would make life more than difficult.

Banks hold money on trust and to gain our custom paid us part of the interest they accrued using it.
They have proved untrustworth. Now money has no stable value, since exit of the gold standard. The system is heading to self destruct We need free access to our cash.

Why on earth should I pay to get hold of my own money? The only answer I have is no way Jose!

Your bank holds your money, and if you go there or use the ATMs they fund you will not be charged. You can also access your money, free, through a post office, or store cashback. Independent STM operators do not hold your money, they provide a means of accessing it through equipment they provide and service that costs them money, for your convenience. It seems not unreasonable to have that service paid for.

Ian. says:
24 January 2018

Hi all I have read a lot of the comments and as an older member of society I can remember going into a bank and drawing my money out, having a laugh and joke with the staff and in those days when you got a job at a bank or building society it was a career !………Anyway I digress I retired a few years ago, moved from Liverpool to the rural High Peak area, There was 1 bank which was only open 2 days a week however that went a couple of years back and now I have to rely on either the Post Office (which is probably on someones hit list) or the free to use cash machines at the local supermarkets. I know we now live in the 21st century and have contact less payment on our cards but surely these are open to fraud, I have used it on several occasions but not once has anyone checked to see if it was my card ! I am still a firm believer in not buying anything unless you can actually pay for it……………. I know ,silly isn’t it ! but there is no doubt that the banks are more than happy to let people run up large debts.
Keep the ATM’s free but make sure you always have a few quid in your pocket to fall back on.

I am glad you still have convenient access to your money via the Post Office and local supermarkets.

In the article it states that banks pay 25p for every withdrawal made. Not the case. When banks aren’t being bailed out by the government, where do they get their money from? Yes, in one.

https://www.link.co.uk/about/news/link-proposals-for-funding-the-free-atm-network/

“LINK, the UK’s cash machine network, has issued its Members with a proposal and consultation on the future level of its interchange fee, which funds the free-to-use ATM network.
LINK is consulting its Members and the LINK Consumer Council on proposals to reduce the level of interchange – the fee paid by card issuers (banks and building societies) to ATM operators. The proposals include:

A 20% reduction in interchange rates over the next four years, from around 25p to 20p per cash withdrawal. This will retain an extensive network of free ATMs for consumers, whilst avoiding the growth in ATM numbers that has occurred over recent years, despite declining consumer demand for cash for payments.

The biggest reason why banks want to force a cashless society is that for every transaction by card, they can charge the seller, putting the prices up for the customers in the long run. Every time we take out cash and go to a market, boot, craft or any other fair, etc., the banks get nothing from the transaction.
When we donate to most charities, by card, banks will take a cut.
A cashless society is not to benefit the customer, in the majority of cases, it is to benefit the banks. The only logical response will be to tax banks higher, as they will be perfectly able to afford to subsidise us for NHS, Defence, public travel with our money.