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Updated 06:54 25/09/20

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Free cash machine network under scrutiny

Daryl Jackson, News Editor
26 Jan 2017, 3:54 p.m.

More than half of free cash machines in the UK are under threat as some banks demand reductions in the fees they pay to use other providers’ ATMs.

A system known as LINK currently allows customers of all banks to use other providers' cash machines free-of-charge, but that is now in question. Banks say they pay too much for the use of independent cash machines from providers such as such as Note Machine and PayPoint.

Members of LINK, including banks and independent ATM providers met on Thursday in an attempt to resolve the dispute, but the issue remains ongoing. If no resolution can be found, customers may face additional charges when they withdraw cash.

John Howells, chief executive of LINK said parties agreed at Thursday's talks to set up a working group "to explore a way forward for the sustainability of the LINK Scheme."

Independent companies own 57 per cent of the UK’s 70,000 cash machines. These tend to be located in supermarkets, shops, newsagents and more remote locations.

Each time a transaction is made, the customer’s bank pays just under 30p to the cash machine company.

Providers argue that the charges, known as interchange fees, are justified to cover the cost of running the machines. The fees are agreed by banks, providers and the Office of Fair Trading, and are audited by KPMG accountants.

Ron Delnevo, director of the ATM Industry Association in Europe, a trade association, said that if one bank pulls out of LINK it is “likely to collapse” and some free ATMs will start disappearing.

Mr Delnevo said it is only "one or two" banks that are losing money on the fees they pay to ATM providers. The are now trying to recover their costs.

“There is a simple solution to that problem. Provide your customers with enough ATMs. If you’ve got millions of cards out there and not enough machines, people are going to use other cash machines.”

If banks have provided enough coverage in their cash machine network, the fees they pay would not be of concern, Mr Delnevo argued, pointing out that charges for transactions have come down from more than 40p since the LINK system was introduced, to less than 30p now.

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