Companies operating free-to-use cash machines in remote areas are to receive extra payments that could help stem the tide of ATM closures.
Under the changes, operators will receive increased payments of up to £2.75 each time someone withdraws cash from an eligible machine.
The extra financial support, paid for by Britain’s banks, is being introduced by Link, the UK’s largest cash machine network, following warnings ATM “deserts” could be created across the UK as providers shut unprofitable machines in less well-off and rural areas.
In June 2018, the consumer group Which? revealed cash machines around the UK were closing at a rate of 300 a month, with rural communities worst affected.
About 1,000 ATMs will initially be eligible for the enhanced payments, with this number likely to increase, said Link.
Another benefit for consumers is that some cash machines that currently charge users to withdraw money are expected to be converted into free-to-use ones so operators can take the payments.
The move follows a row over a phased reduction in “interchange rates”, the fees card issuers, mainly banks, pay to ATM operators. In January 2018, Link announced a phased 20% cut in interchange rates over four years, from about 25p to 20p.
The cuts would have saved banks millions of pounds in charges, but after an outcry from campaigners and concerns from regulators, they were scaled back last summer.
The first and second reductions took effect on 1 July 2018 and 1 January 2019, but a third cut in fees, due in January 2020, was cancelled, while the fourth, scheduled for January 2021, was put on hold pending a review.
The dramatic increase in contactless payments for small transactions is arguably making cash less necessary, but Which? had said the planned fee cut was making it more difficult for independent operators to survive.
The new payments, known as “super premiums”, will take effect from 1 April.
Currently, operators of eligible ATMs receive a top-up subsidy of up to 30p through Link’s financial inclusion programme. The payment is in addition to the interchange rate.
There are more than 50,000 free-to-use ATMs across the UK, but the vast majority will not be eligible for the super premiums.
Currently, about 3,500 ATMs are protected because they are half a mile or more from the next nearest free cash machine, or are located in low-income parts of the country, as measured by official data, where access to cash is vital. These ATMs were ringfenced from the changes to interchange rates.
John Howells, Link’s chief executive, said: “These premiums will further safeguard ATMs in remote and less well-off areas.”