Thousands of cash machines may be closed

Thousands of free-to-use cash machines could be closed because of a cut in the fee operators receive from banks each time an ATM is used, the industry has warned.

However, the fee will be unchanged for free-to-use ATMs which are 1km or more from the next nearest cash machine.

The move is an attempt by Link, which oversees ATMs, to encourage operators to place machines in more remote areas.

But the ATM industry body said the move would see up to 30,000 ATMs disappear.

The fee, known as the interchange rate, will be reduced from 25p to 20p per withdrawal, in annual steps over four years, to protect the network, according to Link.

The cut in the fee will take effect from 1 July. The situation will be reviewed each year to assess the impact on consumers.

Link said that the move, alongside other measures, would "shift the incentive" for operators which have been clustering ATMs in city centres to move some to rural and less affluent areas.

An extra subsidy of 10p per withdrawal, currently available to 300 ATMs, will be tripled to 30p for some of the cash machines in areas with little access to cash.

John Howells, chief executive of Link, said: "The UK has a near record number of ATMs, yet the recent growth has led to the majority of these being placed in busy areas where there simply is no need for a new ATM.

"The combination of a reduction of the interchange, with the significant strengthening of the Financial Inclusion Programme, will begin to rebalance the network, making sure we protect and install new ATMs in locations that really need them."

The confirmed plans have been criticised by the industry and some consumer groups.

Ron Delnevo, executive director of the ATM Industry Association (ATMIA), said that the current network of 55,000 ATMs was "providing financial inclusion everywhere".

"To lose any of them would be a disaster, but we will lose 25,000 to 30,000 from these measures if they are allowed to go ahead, which they should not," he said.

Consumer group Which? said the move could lead to "mass closures" of free-to-use machines, adding to the 200 communities in Britain that already had poor ATM provision, or no cash machines at all.

Mike Cherry, national chairman of the Federation of Small Businesses (FSB) called for a full public consultation on Link's plans.

He said the FSB was not convinced that the proposals included enough protection for vulnerable communities.

"There's no guarantee that having everyone within a kilometre of a cashpoint will be enough to meet demand. Equally, we need to question whether it's right to make vulnerable ATM users travel a kilometre every time they need cash.

The Treasury Committee of MPs has also expressed concern over whether there will be an even spread of ATMs across the country. Any big fall in the number of cash machines would "clearly be of concern", said Nicky Morgan, who chairs the committee.