We must stop the great cashpoint grab
Moves to close hundreds of ATMS every month look after bank interests, not the customer
Barbara Pointon is 78 years old and lives in the Cambridgeshire village of Thriplow. She’s a retired lecturer and pays for everything in cash.
Once a week, Barbara gets in her car and drives to the nearest ATM, five miles away in neighbouring Great Shelford, so she can do her shopping, buy medicines and pay her cleaner.
These cashpoints are essential for her to live her life – if they’re closed, she’d have to travel 14 miles to her next nearest ATM – a journey she’s lessinclined to make as she gets older.
Yet Barbara is one of the millions of people in the UK solely reliant on cash whose access to their money could be under threat. Thousands of cashpoints have closed in the past six months, and the most extreme predictions suggest that as many as 30,000 ATMS could disappear over the next decade or so.
Barbara spoke to Which? as part of our campaign to ‘Save our cashpoints’, which, alongside an alarming reduction in bank branches, risks shutting people out of financial services across the country.
Why is this happening? It’s worth explaining how the ATM system works in the UK.
Every time you use a freeto-use cashpoint, the bank or building society that issued your card has to pay a fee to the cash machine operator. This “interchange” fee was set at around 25p. So, if you used your HSBC card to get cash out from a Santander machine, HSBC paid Santander the 25p interchange rate.
Link is the largest ATM network in the UK, representing banks, building societies and cash machine operators. Last year, it undertook a consultation aiming to reduce that interchange fee.
Its arguments were thus – there were more than 70,000 cash machines in the UK in 2015, and the network had been growing, despite a shift away from the use of cash and towards card payments.
And too many cashpoints wereclusteredinurbanareas– some 80 per cent of free ATMS are within 300m of another free cashpoint.
Reducing the interchange fee would cut the incentive for cash machine operators to open new ATMS in urban areas, or see them remove those that were less financially viable.
And, it must be said, Link was coming under severe pressure from their members to cut costs.
In its consultation, Link stated that the changes were also prompted by a reduction in interchange fees by a rival network, resulting in an “an obvious threat” to Link’s competitive position.
Card issuers have the option of moving to a cheaper service provided by competitors, said the consultation; suggesting that the move has been pushed by banks and building societies, which believe fees should be going down as the use of cash declines, looking to save money.
Link’s consultation was not public, and the outcome was to reduce the interchange fee by 20 per cent over the next four years – around 1p per year. It was waved through by the Paymentsystemsregulator(psr), on the proviso that Link regularly reported the impact of the cut and had plans in place to ensure overall access to cash was not reduced.
Thisincludesextraincentives tokeepopenatmsinruralareas and a guarantee that ATMS more than 1km away from the next were exempt from the cuts.
The first reduction kicked in this week. But in the run-up to the change, Which? discovered that thousands of cashpoints have closed. We used data provided by Link to analyse the cash machine network in the five months leading up to the interchange fee cut, and found that 300 ATMS a month closed between November 2017 and April 2018, amounting to a 2 per cent shrinkage of the entire UK network – up from the 50 a month that were closing in the previous years.
Independent ATM operators told us that the anticipated hit in revenues forced them to drastically reduce the numbers of machines they operate.
Link initially vigorously rejectedourfindings.however, far from disproving our analysis, Link data published on its website showed that the rate of closures may actually be higher, with over 500 machines a month closing, in the 5 months between December 2017 and May 2018. Whichever way the numbers are cut, the reality is that the pace of ATM closures has accelerated, even before this fee shake-up has kicked in.
Link has an obligation to be open, transparent and accurate about the impact of this fee reduction on the UK’S ATM network.
But this whole process has been messy and opaque, and calls into question whether or not Link can be trusted to meet the commitments it has agreed to.
That’s why we’ve been pressuring the PSR, saying that it should be the regulatory body reviewingthenation’saccessto cash, not Link, an organisation thatrepresentsthefirmswitha financial interest.
People like Barbara Pointon are the ones who have to endure the consequences of this attempt to reshape the ATM network, and it’s her needs – not those of banks or building societies – that should be at the heart of any decisions that make changes to access to cash.