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A major overhaul of the UK’s 70,000-strong cashpoint network, Link, is under discussion in a move that could lead to the closure of a large number of hole-in-the-wall machines.

The 30 or so members who make up the automated teller machines (ATMs) network are debating what would be the first major changes in 16 years. There are fears the system could break up unless agreement can be reached.

It comes at a time when the number of cashpoints is at a peak but withdrawals are declining as customers use contactless cards and other payment methods.

The system costs £900m a year to operate and is based on a fixed formula under which card issuers pay an interchange fee to machine providers to cover the costs. It is calculated by dividing the cost of running the free-to-use network by the number of transactions and is between 20p and 30p.

This means the cost of the system is rising for some members of the network, which includes banks, building societies and independent providers, and now operates more than half of the UK’s ATMs.

It would be the first overhaul since 2000 when a row erupted over potential charges and led to many ATMs provided by banks and building societies becoming free to use.

One of the new ideas has come from Lloyds Banking Group, which has raised the need for a review of machine locations – such as too many in some areas and not enough in others – to reduce the network cost.

Link said the review was of its “multilateral interchange arrangements, which is one aspect of the fee mechanism paid to ATM deployers”, and said it was a business decision for ATM providers to decide how many to operate.

The siting of ATMs was highlighted on Monday by the Federation of Small Businesses (FSB), which raised concerns about towns and villages running out of cash because of bank closures, not enough cash machines, and poor-quality ATMs. The FSB quotes a member in Lochinver in the Scottish Highlands as saying: “The ATM is currently causing a lot of headaches in the village. The machine is past its sell-by date. There was an ATM in the post office but it was costing them a lot of money to run so it had to go.”

Of the UK’s 70,000 ATMs, some 40,000 are provided by independent suppliers. Machines that charge customers for withdrawing cash - about 25% of the network – set the costs in agreement with the owner of the location, such as a corner shop. These machines account for about 3% of transactions.

Lloyds said it was “committed to ensuring that our customers can access their banking in the easiest and most convenient way possible. As part of Link’s network members council, we work with all ATM service providers to understand how we best serve our customers.”

One of the independent providers warned that without agreement the system could fragment. “It is highly detrimental if it does break up. It has ensured widespread cash access across the UK,” said Peter McNamara, chief executive of NoteMachine, which has 8,700 cash machines across the country.

(Source: theguardian.com)