MPs examine impact of interchange fee cuts on ATM provision

All Party Parliamentary Small Shops Group held an evidence session on the challenges facing free to use ATM operators in light of recent cuts to interchange fees implemented by LINK.

The session, chaired by APG Chair Ruth George MP, included contributions from LINK, the Association of Convenience Stores (ACS), the Federation of Small Businesses, Which? and the Payment Systems Regulator.

Over the next four years, LINK plan to reduce the interchange fee – the fee paid by banks to cash machine operators – from 25p to 20p. The first of these reductions came into effect on July 1.

During the session, LINK confirmed that it will provide monthly reports to the Payment Systems Regulator on the number of free to use ATMs that are further than one kilometre from the next closest free to use ATM, as well as updates on how their Financial Inclusion Programme is working in practice.

ACS has called on LINK to be transparent about the application of their Financial Inclusion Programme and the impact of their interchange fee cut on rural ATMs during the session.

James Lowman, ACS chief executive, said: “LINK’s decision to press ahead with cuts to interchange fees is already leading to retailers having to make difficult decisions about the future of their cash machines, potentially leaving rural and isolated communities without access to cash.

“Retailers cannot be expected to subsidise the network, especially when the big banks, who are profiting from the interchange fee cut, are closing branches in their thousands and abandoning consumers across the UK.”

In the session, consumer group Which? raised concerns that LINK’s decision had been made with commercial interests in mind, rather than the interests of consumers. Figures released by Which? at the end of June revealed that around 300 cash machines had closed every month since November 2017, possibly in anticipation of LINK’s reduction in interchange fees.

The Payment Systems Regulator stated that LINK had met its requirements to press ahead with cuts to interchange fees, but that any cuts must be accompanied by close monitoring to understand the impact that cuts have on the overall free to use ATM network.

The 2017 Local Shop Report by the ACS shows that 58 percent of stores in the convenience sector have a cash machine. 45 percent of stores provide a free to use cash machine, while 13 percent have charged cash machines.