The UK’s main cash machine network LINK has announced today that it will cut most ATM interchange fees by 20% over the next five years. The ATM interchange fee is the payment made to ATM operators by current account providers per transaction. This fee is set by LINK, the inter-bank payment system which governs the interoperability arrangements across nearly all the ATMs in the UK.
The number of ATM transactions has been falling in the recent years, while the number of ATMs has not. This has led to an increasing cost per ATM transaction, threatening the viability of some ATMs, particularly in rural areas. The reduction in the interchange fee is aimed at shifting incentives from deploying too many ATMs in city centres while retaining sufficient access to cash in rural and less-affluent communities.
While the headline charge is reduced, all ATMs that are more than one kilometre from the next free ATM will be exempt from the reductions in interchange fees. In areas that are deemed unable to sustain a free-to-use ATM, an enhanced subsidy of up to 30p will be available. These measures, along with the gradual implementation and ongoing review of ATM availability across the country are expected to prevent more rural communities from becoming ‘cash deserts’.
Paul Cullum, from Frontier’s financial services team, said: “Protecting reasonable access to cash at a reasonable cost is a complex task. LINK’s decision should help with both reducing the cost of cash distribution and safeguarding reasonable access to cash. It will be interesting to see how the market responds to the changes announced today.”
Frontier works on payment systems design and operational issues, including ATMs, for a wide range of organisations including banks, financial services regulators, and payment systems.
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