UK ATM’s In Danger Of Closing Due To Link’s Interchange Fee Cut

Link is the main cash machine network in the UK that provides thousands of free-to- use ATMs all over the country. The company recently announced that they are implementing a cut in the interchange fee paid by banks and credit card issuers.

The move was aimed to make machine operator more attractive to banks, thus making it possible to open more free-to-use machines in poorer and more rural areas.

Interchange fees are fees paid by the bank to ATM operators like Link whenever their customer uses a free-to-use machine to withdraw money.

This system creates financial incentives for operators to continue offering free-to-use cashpoints for consumers. Link is poised to reduce the current 25p fee charged to banks per transaction to 20 percent over the course of four years.

Starting July 1, Link will start rolling out the changes by 5 percent, bringing the fee down to 20p for the first year. While the reduction in fees appears to be a good thing, it can have a negative impact on Link’s profits going forward and that can result in Link deciding to reduce the number of free to use ATMs in the future.

John Howells, chief executive of Link, explained that UK has one of the highest number of ATMs available throughout the country, but the majority of the ATMs are located in busy areas where there is no need for newer ATMs. Howells says the cut in interchange fee will help the company balance out the supply of machines and put up more machines where it is more needed.

While Link argues that their decision will help them address the over-expansion of ATMs in urban areas where cashless transactions have become more popular and widespread, experts are saying that Link is rolling out the cuts because of pressure from UK banks such as Barclays, Royal Bank of Scotland, HSBC and Lloyds to leave the network. This move instead of benefiting the customers might lead to the contrary instead as close to 25,000 ATMs could be shutdown.

According to Ron Delnevo, executive director of the ATM Industry Association, the cuts in interchange fee might lead to unprofitability for Link, which can lead to closures of up to 30,000 free-to- use ATMs. In addition, a report by consumer group Which? found that already 200 communities in rural areas are suffering from poor ATM provision. If ATMs were to be decreased, especially in poorer areas, people will have to travel more and farther just to access a machine.

This has forced the Federation of Small Businesses (FSB) to call for a full public consultation on Link's plans.

Charlie Harrison

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