The Treasury’s new plan to protect access to cash will fail to prevent many free ATMs in local shops being lost or switched to pay-to-use, according to experts.

A government statement on 18 August said the Financial Conduct Authority had been given new powers to prevent the last bank or ATM in a local area from closing without a replacement service opening, enforceable through fines.

The FCA said it would seek to maintain cash access ‘in keeping with the current distribution of services’, meaning nobody in the UK should be more than three miles from a free cash withdrawal. However there were no measures to reverse the cuts in the fees paid by banks to ATM providers which have made some convenience store’s free to use ATMs ‘unprofitable’ for ATM providers to continue supporting.

For instance, the latest LINK statistics show more than 10 free to use ATMs are disappearing every day in the UK.

Notemachine is one of the largest independent ATM operators in the UK, operating thousands of sites in convenience stores. This year alone more than 1,000 NoteMachine ATMs are switching from free to pay to use. The company’s sales director Charlie Evans told Better Retailing “Today’s policy statement from the Treasury fails to address the crucial matter of how the UK’s free-to-use ATM network is funded.

The network remains under significant cost pressures due to successive cuts to the funding paid to ATM operators for every customer withdrawal, with rising interest rates making this picture even worse.

If this continues to be ignored by the Government, it will become impossible for independent operators like NoteMachine to maintain free-to-use cash machines at an adequate level, and the headline policy measure of today’s statement will be extremely difficult to enforce.

Continued inaction on funding of the ATM network risks failing the millions of consumers and businesses that rely on cash every day.”

While welcoming the measures, the ACS said it is “continuing to call on Ministers to review the viability of [ATM] interchange fees so that convenience retailers can continue to offer free access to cash in communities instead of being switched to a pay-to-use model.” 

The wider impact on convenience stores

Speaking to Better Retailing a spokesperson for LINK added: “Broadly, the announcement has nothing new for ATMs. Many of the new requirements have been taking place voluntarily, already. What this does, as we’ve expected for some time is regulate and make these voluntary actions mandatory.”

These voluntary actions are said to have included funding ATMs where an access gap in the network is created, and banks delaying closures to protect local access to cash deposits and withdrawals.

Asked about the wider impact of the Treasury’s plan on convenience stores, the Link Spokesperson answered: “Where it will make a difference is how your readers can deposit cash. With the requirement for last branches in town to set up an alternative or banking hub before they shut protecting access to depositing takings, and what we’re going to see is an acceleration in banking hubs opening.”

This access to withdrawals and deposits could have some impact on the ability of stores to maintain ATM services, with the LINK spokesperson explaining: “Many stores use self-fill ATMs, and as cash use has declined, it’s become harder for retailers to keep these ATMs full. Hopefully one change these stores will see is that it may become easier for these stores to withdraw funds to fill these machines with from the banking hubs, but clearly this won’t resolve the challenges for instances where the last bank in town has already shut.”

The Future of Post Office Banking hubs

Post Office banking hubs are where different banks and building societies pool resources to set up a single Post Office-run site where customers can continue to access cash and support. LINK expects these to play a vital role in the Treasury’s plan. The spokesperson said; “The Post Office Banking Hub rollout may have been slow so far, with seven permanent hubs up and running, but the company responsible for the project, Cash Access UK was formed earlier this year and we’re expecting more progress. We’ve signed 10 new leases for new sites and there’s 10 more very close to being signed. It takes eight to 10 weeks from agreeing the lease to opening a banking hub so we hope to see 10-20 new sites up and running before the end of the year.”

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