Cashback will replace cash machines within five to ten years, under plans from Link, Britain’s biggest ATM network.
Shops will be told to offer free cash services to members of the public with no requirement for them to buy items first.
The amount withdrawn from cash points will halve over the next decade as consumers move to using credit and debit cards for everyday spending, according to Link.
John Howells, chief executive at Link, said this will make many cash points unprofitable and many in rural areas will need to close.
Tens of thousands of newsagents will trial pilot schemes for free in-store cash services next year.
Howells told the Daily Telegraph: “Cash volumes will have halved over the next ten years so alternatives to cash points need to be considered.
“It will eventually become too expensive for cash machines to operate in some parts of the UK, but as long as there is still one person in a village that still uses cash, we need to make sure they still have access.
“Getting cash out of retailers’ tills is perfectly technically possible, and is a much cheaper way of doing it. At around £10,000 a year cash points are enormously expensive to run.”
Retailers offering customers free cashback are currently charged a fee by operators. But Link plans that instead retailers will be paid for their cash services through an interchange fee paid for by banks.
But Ron Delnevo, executive director of the ATM Association, which represents independent ATM providers, claimed the decline of cash was being “manufactured” by banks to increase profits.
He said: “This plan for shops to delivering cash instead of ATMs is based on fallacy that cash use is declining. Over the past year 76 per cent of transactions across 50,000 of the UK’s convenience stores were made in cash.
“This is a conspiracy against cash by banks who will see their profits go up if we all use cards instead of cash, and it is time they owned up to it.
“Replacing ATMS with in-store cash services won’t work because supermarkets don’t have enough cash to go around.”
The news follows warnings that one in five cash points will disappear from Britain’s high streets within four years.
The “catastrophic” fall in ATMs will result from Link enforcing radical cuts to the fees cash point providers can charge banks when customers withdraw cash.
After deciding these fees should be cut by 20 per cent over the next four years, Link is currently consulting on the details.
Nicky Morgan MP, chair of the Commons Treasury Committee, said any big fall in the number of ATMs would “clearly be of concern”.
Morgan has written to the head of the Link network amid debate over an overhaul of the system.
The Association of Convenience Stores contacted Asian Trader to say it has received an embargoed copy of a release from Nicky Morgan’s office which raises concerns about the viability of the cash machine network based on correspondence with the Chair of LINK.
The ACS is strongly in favour of retaining the existing network of cash machines.
ACS chief executive James Lowman said: “There are many local traders, market stalls and other small businesses in towns and villages across the UK that can only accept cash, and these businesses often rely on nearby ATMs to ensure that people can shop with them. Convenience stores have invested in the provision of free cash machines as part of their commitment to serve thousands of communities, but this is under threat by LINK’s proposals which could make many unviable.”
“Any proposals that would result in a reduction in the number of cash machines must be scrutinised in detail, and we welcome Nicky Morgan’s comments on the issue. Cash remains an essential part of a convenience store business, so any reduction in the number of locally available ATMs could have a significant negative impact, both on convenience stores and other local businesses.”