Slowly and silently, 10,000 free-to-use ATMs are set to disappear from Britain’s high streets over the next four years — despite recent findings that at least 3 million people across the U.K. rely on cash for almost all of their day-to-day payments.
This is happening because LINK, which runs the U.K.’s biggest ATM network, is incrementally cutting the interchange fee for withdrawals from 25p down to 20p, beginning this July — a move that Europe's ATM Industry Association expects will prompt independent ATM operators to shutter about 20% of LINK's fleet of 55,000 free-to-use ATMS in the U.K. by 2020.
LINK cites its own data on ATM usage to infer a corresponding drop in cash use. However, others say cash use in the U.K. remains far more prevalent than LINK suggests, citing statistics from the 2017 Association of Convenience Stores report which show that between April 2016 and April 2017, in 55,000 convenience stores across the country, 76% of transactions were still made using cash.
Ron Delnevo, executive director for the ATM Industry Association in Europe, says that LINK is bowing to pressure from the major banks, which want to cut service costs and increase the use of card schemes to boost their profits.
“The banks want to drive people to use noncash payments,” Delnevo said. “This is because the only way they can cut costs is by cutting services, closing branches, taking out ATMs, and so reducing the amount they pay through LINK. And they’re doing that very fast. Last year, the five big banks took out 2,000 ATMs at their branches and elsewhere.”
In particular, industry experts suggest that Lloyds Banking Group, which has the most debit card schemes in the U.K. and announced its intention to reduce costs to 40% of its revenue base, has been key in pushing for a reduction in the interchange.
But LINK is clear that its plan is driven by consumer behavior. Even as shoppers continue to use cash, they are making less use of ATMs.
“Cash usage seems to be declining in the U.K., and ATM usage is declining as part of that,” said LINK spokesman Graham Mott. “The data suggests that people are paying less visits to ATMs overall, but taking out slightly more cash when they do go. The reduction in the interchange reflects the falling demand for cash that we’ll be seeing going forwards.”
LINK says that it's reducing ATMs only in areas where there are too many relative to the demand, and in rural communities, they are subsidizing ATMs to make sure there is still a service. “It’s about balancing the network,” Mott said. “Letting the number of ATMs drop to match the demand, but making sure the network is there so those who want to use cash, still have access to it.”
However, Delnevo says that with such a sizable cut looming in the overall ATM network, it will be impossible for LINK to guarantee a satisfactory service.
“They promise they’ll keep at least one ATM in every community, but that’s not enough,” he said. “ATMs are electromechanical machines; they go out of order. The average ATM is this country is down for two to three days a month.”
Further, Delnevo says, there is no inherent need to cut the interchange fee or reduce the number of ATMs, as in comparison to continental Europe, the fee is much lower and Britain’s ATMs are considerably more popular.
“Interchange is this country is the lowest in Europe,” he said. “Ten years ago it was nearly 40p, now it’s about 25p. Our ATMs continue to be twice as busy as ATMs in France, and almost twice as busy as Germany.”
Delnevo predicts that the major winners within the payments industry from these changes will be businesses such as Visa and Mastercard. “It will only increase the profits of the card schemes,” he said. “One ATM will not deliver a proper service and mean that cash isn’t available for the public or businesses, and it’ll drive them to increasingly use cards.”
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Corrected April 3, 2018 at 11:06AM: An earlier version of this story misattributed the prediction that 20% of LINK ATMs would be shut down by 2020.