/ Money

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


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?

Chris W says:
24 January 2018

Just the latest example of the Finance Industry assuming it can force all of us into line in accepting changes to our lives simply for their convenience. So the banks and card providers don’t like the charges they have been paying? Hard luck!
It’s about time we had a government which realised that IT should br responsible for creating AND RUNNING a proper, simple, free and universal banking and cash system for its citizens. We used to have a very basic system called the Post Office Savings Babk, which, combined with the collection of pensions from the many Post Offices and Sub-Post Offices enabled ordinary people to do what they needed. Successive governments have been allowed to sweep it all away instead of bringing it up to date. Big Business has been allowed to act as it and only it can decide what services we are allowed to have, and cowardly or complacent governments have conspired to permit this to become a fact.
Privatise LINK and all its associated tendrils. Give us a Public Bank, and hold government to account for running it efficiently.

Ruth B. says:
24 January 2018

I had the biggest shock last night i was looking for a bank in a different town and all i could see on the list of banks was closed, four banks in one town and only the main banks left open in the main town it’s disgusting how the banks are out to get rid of us using our own cash and the government are letting them do it.There should be a petition to stop the banks doing this.

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If we have to pay for every withdrawl from ATM’s, this will mean that we will have to use them less frequently and in so doing will have to withdraw larger sums of money, which could also be the effect of extensive bank closures.

I am nearly 80 and have COPD. I live in a small village in Cambridgeshire. There is only one ‘hole in the wall’ within a radius of 6 miles from where I live and the only bank left in that area is preparing to close as well. I need to use cash for regular help from my cleaner, gardener and window cleaner; to pay for newspapers, food and other basic goods from the tiny village shop; to give pocket money to my grandchildren and find bus fares (only two buses a day) for hospital appointments and places beyond the 6-mile limit. And in the rare times in good weather when I’m able to take my car out to the hospital, the parking fee is in cash.
It would seem that no-one is considering the impact on the elderly of removing or charging for access to their own money – increasing their isolation, worries and maybe creating depression. And hoarding piles of cash at home – a burglar’s delight!

Penny SIMPSON says:
28 January 2018

Sadly a lot of small shops are victims of ‘Smash ‘N’ Grab’ robberies, whereby a vehicle is driven into them, to smash the window or wall, the cash machine literally ripped off and taken away in a getaway vehicle, often different from the ‘smasher’ one. Due to lack of security, like CCTV cameras focussed on these machines, Police have trouble identifying the culprits, and the stores may opt not to continue with the ATM service due to repair costs. If the suppliers of ATM cash machines provided CCTV and assistance with relevant insurance, there would be less loss of these machines.

Gordon Whitehead says:
28 January 2018

The planned closure of free ATMs shows the need for an overall national policy on banking provision. The major banks keep closing branches and justify this by arguing that they are providing alternative services such as on-line banking and mobile apps. However, not everyone has access to good broadband for on-line banking to be feasible, nor do all people use smart ‘phones. Even with good broadband for every one and every one using smart ‘phones, there would still be many people who would not want to carry out their banking business this way. As for the regular claim that cash is dead, I put that in the same box as the oft made claim that by 1964 every household would own two cars. Moreover, when it comes to on-line banking and mobile apps, no one has yet produced a system that allows you to get cash out or pay cash in. ATMs are still needed, therefore, and branches are still needed. The government needs to come up with a compulsory overall policy for banking outlets based on geographical accessibility. This could be based around the post office system and all major banks would be required to accept payments in from it and offer cash withdrawals and account inquiries, e.g. balance requests. There would be a charge levied by and payable to the post office network.

As far as I can see, 11500 post offices offer such banking facilities, for free, to all the main banks. I agree that all settlements of reasonable size should give access to banking, whether through your own or an alternative bank, or the post office. We’ve suggested before that retaining a single outlet that serves several banks could also be an economical way to serve many clients.

Maybe the banks should make a start on shared banking facilities before too many more branches are closed. I used to use a shared facility at the university where I worked, and it was very useful.

Most households visit a supermarket about once a week and all large supermarkets seem to have a cash machine as well as providing up to £50 cash-back at the checkout. I appreciate that this does not suit everyone but it is very difficult for banks to keep branches open when the population has voted with their feet, gone on-line, or met their money needs somewhere else. I certainly support shared banking facilities but don’t think the government should get involved in planning the distribution of banking services. It might make the present situation worse.

It is incredible how so many small towns could once support several bank branches, but that was when handling cash and coin and processing cheque payments was largely unautomated, labour intensive and time consuming. In those days, too, the branches were mainly there for local companies, shopkeepers, farmers etc and often processed wages, savings, investments, loans, mortgages, insurance and credit references. Although some of this work remains, a lot of the higher value business has gone elsewhere. The ordinary personal customer has never been the banks highest priority; they were tolerated on the back of commercial activity. With more and more limitations on how banks can recover their costs for overdrafts and other facilities I fear that the prospects for survival of the present extensive branch structure are poor.

I would be interested to know if banks pay supermarkets to have ATMs on their premises. Within ten miles of where I live, the only supermarkets with ATMs are Morrisons, Tesco and Waitrose.

Brian Morrish says:
28 January 2018

ATMs should NOT be reduced, and ALWAYS be free at the point of use.

You cannot have both if third parties are to make ATMs available for the convenience of some. If they cannot charge to make their provision pay then they will simply opt out and all will lose. I do not see a small fee as unreasonable when someone provides you with a convenient service. You pay more at a village shop that is local to you than in a larger store or supermarket, but it is more convenient.

I would take all my money out of the bank, I do not think it is fair that the bank can use your money and make a profitable gain ,and start charging for atm machine , it is now time for the people to put thier foot down.

I think a lot of people might feel the same, Michael, but need a bank account to receive their wages or pension payments. Presenting a cheque for cash in the branch remains a free service. Anything more convenient is likely to come at a cost unless it attracts a high volume of use and relieves pressure on the branches.

It’s disgusting the way banks treat their customers. The public have been forced to open bank accounts because the majority of employers pay wages by Bank transfer nowadays, Even benefits and pensions too. We should not be charged for withdrawing our own money. The banks make enough money from their customers as it is without charging us at cash machines. We customers should threaten to withdraw all our money from banks if they go ahead with charging for cash machines. That might shake them up a bit. I view banks as a necessary evil.

Unfortunately, in respect of many customers, I expect the feeling is mutual.

“Which? is concerned that LINK – the UK’s largest cash machine network – proposals to lower the interchange fees by 20% could lead to closures of free-to-use ATM machines across Britain. The fee in question – currently around 25p per withdrawal – is paid by banks per withdrawal to maintain the free-to-use ATM network.”

” Meanwhile, four in five (80%) said that access to the free-to-use network was important to their daily lives and paying for goods and services.”

I should probably look at this in more detail, but at the moment am perplexed. If fees on those ATMs that do charge are low enough, and provide a convenient service to customers, why is this such a problem? Is paying a small amount for convenience not acceptable? The argument that it is “your money” fails when it is not held by those who provide and maintain the cashpoint; your bank will still let you have it for free. Should the majority of people fund the convenience of a small minority? Post Offices and supermarkets will give cash back to many. i wonder how many are actually likely to be affected, and how many of those would not be willing to pay a small fee to withdraw cash? Do we know what the fee(s) generally are? .

It is not JUST the geographical aspect of removal of ATMs from whole areas or towns that is an issue, it is also that fact that ATM,s provide essential access to cash (and an ability to check balances, make payments etc) outside branch opening hours.
The majority of people in UK I would say, carry out most of their monetary transactions outside working hours, when the branches are shut so ATMs are their only choice if they want cash.
People will always need cash at some point, many have no choice because of difficulties with credit and others do not do (and often quite justifiably), trust on line banking.
How can this be anything other than discriminatory?
Shutting branches also makes life even more difficult for independent retailers who are faced with yet one more problem if they have to make long journeys to get cash, and they will always need to as not every customer will use “plastic”, and the retailer may be in one of the many locations with poor or no internet signal. A double blow!

Dawn Somers says:
6 February 2018

I think that this is disgusting, it’s our money we pay enough charges as it is. Their are many reasons for carrying cash. Children’s pocket money, tips, paying to use outside toilets, paying for bread or newspapers in local shops that charge for using cards. The list goes on. Where can we get our currency, as our local banks have closed and we have to travel into town for our nearest bank. So that means bus fares or car parking fees. I voted for this government but may not again if they allow this to happen.

bj Colt says:
7 February 2018

I am totally blind with mobility difficulties and live in a small town in Scotland. For me to get to the bank to carry out any transactions. I would have to get a Taxi and have a carer with me. That entire journey and bank visit costs £20. There is a cash line near my home and if that was to start Charging for withdrawals. I would also have to get a Taxi and a carer to go with me. It is too far for me to walk and it would be impossible for me to go on my own. I’m certain there are other people in a similar situation. I don’t visit the bank very often as you can guess.

I live in a rapidly expanding market town in Northamptonshire. The last two years have seen us reduced to the services of just one bank, three days a week. Banks are no longer interested in providing customers with real service (despite much bleating and TV advertising to the contrary) and are simply interested in cutting costs and raising profits. The town has three ATMs, one of which has been broken into twice, and hence been unavailable for varying periods of time. As bank access is limited, I depend on the ATMs for ready cash; this is especially important to me as I have mobility problems and traveling to another town to get cash presents difficulties. I hope ‘customer service’ prevails over yet another cost-cutting exercise.

Conway Buckles says:
26 February 2018

Banking is a highly competitive industry and needs to appeal to customers. I suspect there is enough data showing them that their customers are using cash machines and bank branches less, choosing to move online and using tap and pay. How about Which? spends it’s efforts educating the few who seem to find the change challenging, helping them understand the new payment and banking methods available to them rather than embarking on this campaign. It shows them up to be backward and old fashioned. Do you honestly think banks are going to flood the high streets with cash machines again?

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Conway Buckles says:
27 February 2018

I don’t work for a bank, I’m a retired bus driver. I do understand market forces. Your gripe with bankers is irrelevant, you may as well argue the movie industry should continue to release movies in VHS format because they’ve made so much money off us and a few people still have VHS players. Fact remains fewer people use cash these days but there’s always going some that don’t like it.

New technology offers opportunity to support old and disabled e.g. for a start you can bank from your own home with online and phone support and most banks offer tech like sign video. Tap and pay is essentially the same process as using cash i.e. you go to the shop and instead of handing over cash, you tap the reader to pay the amount shown on the reader. Even is deepest darkest North Wales I’ve not come across a rural shop that doesn’t offer this service now and there’s rarely issue these days with spending very little on a card like a loaf of bread or paper – the shops allow this now becuase they’ve adapted to fewer people carrying cash. Cards are also more secure; stolen cash is not easily recovered, stolen cards can be replaced and users who find their cards are used fraudulently will be refunded – I had over £700 stolen from my bank account through a stolen card and the bank refunded within 24 hrs and arranged the police investigation.

As for banks being disinterested with providing customer service as a commentator flags up above, look at Which?’s article on banks providing Best Customer Service,
supplied by Which? members –
First Direct in top position – a online and phone only bank that has never had branches.

If removing cash machines was such a big issue, a competitor could sweep up millions of customers just by offering that service where the banks have not. Fact is it’s not. It’s an inevitable change and I believe this is where Which? can offer support by helping consumers with their fear and questions rather than trying roll back time. You show me the evidence that the future of banking is cash machines and I’ll believe your argument.

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Even is deepest darkest North Wales I’ve not come across a rural shop that doesn’t offer this service now

I can show you quite a few…

There are plenty in England too, and with the ban on card surcharges I have seen several ‘Cash only’ signs.

duncan, I think the point Conway was making (forgive me for chipping in Conway) is that using a tap and pay card takes away a lot of the need for cash, and that general banking can be done online. Although it has changed, on balance it is far more convenient than it used to be.

If you do need cash (which most do) then just organise a withdrawal from a bank, ATM, Post Office, cashback to cover your needs and keep it at home.

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I am missing the direct debit point, duncan.

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I am not sure I understand this point: “It is easier to get withdrawals from different businesses if they can be deducted automatically“. What are these withdrawals?

Direct debits are for making payments and they are drawn by the payee against the balance in a current account. This account would normally be used to receive income from employment or pension, etc, and in most cases would have an automatic overdrawing facility. If a week or so before the direct debit is due to be processed it is noticed that the account will not have an adequate balance to meet the direct debit then it can be topped up in a number of ways, including by post [cheque or cash], by making an on-line transfer from another account, or by visiting the bank or building society where funds are held and arranging the transfer in whatever form is most convenient.

So far as I am aware, ATM’s not attached to a bank or building society branch do not generally have facilities for paying in deposits.

Obviously, people in remote areas need to keep a closer eye on their bank account and upcoming direct debits or standing orders to ensure that funds can be moved into place at the right time, but that is nothing new.

It has been pointed out many times in this Conversation that LINK intends to maintain a reasonable level of provision of ATM’s across the UK, mainly by redistributing some of the excess numbers from city and town centre locations. As has also been emphasised, most people have to visit a supermarket every week or so where there are usually cash withdrawal facilities. Some stores run their own banking services and have additional facilities for those customers, and usually also offer energy and other utility services that are the main requirement for direct debit payments.

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Surely, in those cases, nothing’s changed for many, many years? People who live remotely (as we do) and can’t get out and about will find friends in the community who help them, and – to be fair – if they can’t reach the shops or use buses or trains then what need would they have for cash, anyway? I’m playing Devil’s advocate, here.

There are many, many privations attached to living in wild and remote places without the full range of civilised amenities, but just to survive people need to get food and other essentials, which they do, so life does go on. Ways are found or alternatives are explored. Paying bills by direct debit is not essential; I accept there could be financial advantages but the absence of a mains gas supply is far and away a bigger drawback, or the lack of a nearby petrol station, or having to pay extra for any work to be done. So long as there is a way to send and receive mail most other vicissitudes can be coped with.

There is a difference between moving to an area without services and moving to one with services and having them withdrawn.

I met up with three old school friends yesterday and one of them mentioned the loss of cash dispensers and the cost of using the others. It’s not something that might happen in future – in some areas cash dispensers have already gone.

Today it’s ATMs that are under threat but in future companies might want to pull out of providing other important services in rural areas.

Change is something we need to be prepared for, like losing your family home when HS2 runs through your garden. People do need to realise when they live in remoter (or even not so remote) places that things might change. Bus services go, shops close, pubs disappear.

You cannot hang onto to everything – it is a risk that you take. Just like having a housing estate built to spoil your idyllic retirement in the country. In the past pits closed, dock work disappeared, industry shrank, affecting communities, as did Beeching’s railway cuts. But it is also a community opportunity – some organise a minibus service, some reopen a community pub and shop. We cannot rely on others; we need to help ourselves.

Far worse things have happened, and will happen, than losing a free ATM. And anyway, we do not know what is happening to ATMs, we only have speculation.

There is no doubt that is true, Wavechange, and society will no doubt be accused of precipitating it by ceasing to use cash, using the internet for many more transactions, and not patronising the local facilities.

What I cannot see is any means of stopping this tendency. So far as I am aware there is nothing to stop a bank closing a branch or an ATM operator withdrawing the service. At the moment most of the small local supermarkets operated by the big four grocery groups do have a cash machine or a cash-back facility, and I assume this is for sound commercial reasons in generating footfall. The Post Office also seems to be keen to meet these needs.

I am sure there will always be examples of gaps in provision and, as I said a long time back in these Conversations, there ought to be a form of consultation with town and parish councils before services are removed in order to see where a replacement can be provided. But unless the government intervenes and takes control of the network, the availability of ATM’s will continue to be led by market forces.

Malcolm – On Sunday I went to a meeting and our hosts reported success in opposition to the plans for HS2. If you don’t try you will achieve nothing. We have already lost a significant number of ATMs in rural areas. I’m not sure why you are interested because you have said that you don’t have a local ATM. We have opposed the wishes of banks to phase out cheques and I’m keen to retain ATMs when many of us still use cash. I’m not suggesting that everything should stay the same.

We need to bear in mind that the banks are not the providers of many of the ATM’s independent of bank branches. For many of the providers it is a purely commercial decision over whether they will make enough money from the interchange fees to make the provision and servicing of the machines economically viable.

Maybe the government should intervene, John. Although our banks do have to make a profit, that does not mean that every ATM must be commercially viable. In another Conversation it has been suggested that charges for overstaying in car parks should be restricted without any consideration of whether the companies could remain financially viable.

I do believe that there is a need for companies that run essential services to take into account the interests of the public as well as their shareholders. I’m not concerned about the rest.

I myself rarely use cash and will favour places that accept a card. Also, have a little distrust of paying by cash. This group will only continue to grow.

Also with the decline in cash, cash machines have fewer users and vendors make less money anyway. I have already seen a few cash machines disappear. This will slowly continue regardless of the fee change.

That said, it is a ‘utility’ in my opinion. Some agreement should be in place to have access to money. Perhaps more corner shops should be incentivised to be able to hand out cash over the counter. Would help keep more them open!

To manage the decline of money, creative solutions will likely be needed, not just ATM’s. Otherwise, some people will unfairly pay the price of progress.

Ian Thompson says:
8 May 2018

Banking is a utility which we all need in the same way as we need phones,broadband, water and energy.
We accept the need to pay for the other services, so I’m not sure I understand how we can believe it will be sustainable for banks to provide free banking services to their customers whilst at the same time maintaining an infrastructure including branches and a network of ATMs.