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Payment Systems Regulator monitoring LINK ATM proposals

The Payment Systems Regulator (PSR) and consumer group Which? exchanged statements over the weekend, relating to ATM provider LINK’s proposals to reduce its interchange fee by 20%.

Which? is urging the PSR to intervene to ensure consumers are not left struggling to access cash, saying that LINK’s proposals – which have now passed through a consultation period – “cast doubt over Britain’s free-to-use ATM network”.

The consumer group said the move could lead to widespread closures of machines across Britain because the interchange fee is paid by banks per withdrawal to maintain the free-to-use ATM network. Changes could make many machines no longer financially viable, it argues.

Responding to Which?’s call for it to conduct an “urgent market review” that fully evaluates the impact this change could have on consumers, the PSR said: “We know that consumers value the ability to access cash through a widely spread geographic network of free-to-use ATMs.

“It is important for LINK to consider whether its interchange fees encourage an ATM system that meets that need, while also providing value for money for consumers.

LINK’s consultation on its proposals has now closed and we have been clear that we expect it to consider the impact on consumers when forming its decision.”

As it continues to monitor the situation, the PSR says it is taking steps to understand how LINK “intends to take into account the feedback it receives, and assess the implications of its proposals for the provision of ATMs”.

“If we consider that any decision LINK makes is not in the interests of consumers, and is therefore inconsistent with our statutory objectives, we will take regulatory action as necessary,” said the PSR.

Which? is concerned that LINK’s proposals are driven by pressure from some banks to cut costs, rather than focusing on the needs of consumers.

The group also queries whether LINK’s claims that Britain’s free-to-use ATM network should be reduced due to a perceived decline in demand for cash, citing the Bank of England figures that show a 10% increase in the demand for banknotes in 2016.

It has also called for the regulator to conduct a wider review that considers potential alternative options for accessing cash and a full examination of the ATM market.

In a consultation published in November, LINK proposed to reduce the level of interchange rates by 20% – from around 25p to 20p – over the next four years. It prompted Nicky Morgan MP, chair of the Treasury Committee, to write to LINK chairman Mark Boleat, asking for assurances that the proposals will preserve the existing geographic spread of ATMs.

Association of Convenience Stores CEO James Lowman said: “Free to use cash machines support not just the businesses that house them, but also other shops, markets and small businesses that still rely on cash for payment.

“Reducing interchange fees, payable by banks for their customers to use these facilities, could lead to some cash machines being removed from local shops. We welcome Nicky Morgan’s comments on this issue and urge LINK to think carefully about the consequences of the ATM network shrinking.”