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Cash Machines

Fee Charging Cash Machines

Remember the uproar about 5 years ago when Barclays tried to set the trend and start charging customers of other banks and building societies £1 to use its cash machines. Well that failed, but it looks like you could end up paying for your money anyway if certain trends continue. But first some background.

Cash Machine Network- LINK

The principle behind being able to use any cash machine from any UK bank to withdraw money from your account was set up via the LINK scheme. It was created in the 1980's to allow smaller banks and building societies to compete against the larger banks that had wider cash machine networks. Basically it allowed them to share the ATM network. There are currently 51 LINK members. The cost of a bank letting another banks customer use their cash machines is covered by something called the interchange fee which LINK works out and banks have to pay to each other.

Are LINK cash machines free?

According to the LINK website 97% of cash machine transactions in the UK that use the LINK symbol are free i.e. LINK does not mean that its free.
The fee charging or surcharging cash machines can charge between £1.25 and £1.75 per transaction. Considering I usually get a tenner out that's like having VAT on cash!
If you are to be charged for using one of the 21,000 of fee paying LINK machines (compared to the ~35,000 fee-free cash machines) in the UK you will be notified on the cash machine screen saying that "there will be a charge and it will be this much, do you want to cancel the transaction". Unfortunately, this is usually just before the point when you get your cash. I would prefer to be able to make the choice before I've stood there for a few minutes entering cards and numbers.
Most of the fee charging ATM owners are private companies whose business model is to provide cash machines at 'convenient' locations (rural shops, garages, etc) and charge for their upkeep. Now this is where the problem could start.

Fee charging ATM's

The problem as I see it is that we see no issue with a private firm charging you for using a convenient cash dispenser that they own and maintain. But what if the only reason they own the dispenser is because a bank or building society decided to sell it to them? Or maybe because there used to be a local bank branch in the town or village that shut and the existing cash machine was replaced by private fee paying one. This is currently what is happening. In the last six months of 2004 the number of fee paying cash machines increased by 40%. Some of these were due to HBOS (The merged Halifax and the Bank of Scotland) starting to sell 816 of its cash machines, albeit ones in petrol stations, to a company called Cardpoint - a fee charging ATM business. Lets put this in perspective. Barclays tried in 1999 to charge non-customers £1 for each use of their cash machines and failed. The other big banks watched carefully and at the time scolded Barclays for being greedy, whilst secretly being annoyed that it failed. So now they have instead started to sell off machines to private companies who have a responsibility to their share holders to charge and increase profits every year - by taking more money off us for getting our own cash!

Nothing is free

True. Surely any charges that the private companies have to levy are the same as those the banks will secretly charge us for the interchange fee in the LINK scheme? By secretly I mean taking the cost of the interchange fee and spreading it out over the other fees they charge on dealing with our money. I don't know the answer to that, I would hope the banks have been charging us a lot less than £1.50 per transaction. But if they did sell off all their cash machines to private firms would they pass all the savings onto us anyway? I'll let you decide.

The end of free cash machines?

Although its not many machines being sold off at the moment the point is when will it end? No matter what the assurances of the banks will be, they are businesses and if they can screw more money out of us they will. This is why there is such a difference in opinion between banks and mutual's like the Nationwide Building Society. The Nationwide are opposed to the spread of surcharging cash machines, they don't want them removed, just much better warnings of whether it is a fee paying cash machine and tighter control of where the machine can be situated.
At the moment there are still plenty of non surcharging cash machines. If trends continue it is predicted that by the end of 2005 the majority of cash machines in the UK will be of the fee paying variety. At the moment all banks are still publicly committed to maintaining the LINK scheme and keeping the use their own and their competitors cash machines free to customers. As we get more used to seeing fee paying cash machines all around us this stand could change and we could see the end of free cash machines.

What can be done

• Don't use cash when possible - Many places accept debit cards with no minimum or a low spend.
• Get cashback - Again with your debit card from the supermarket.
• Use the branch cash machine - It will remain fee free for the forseable future.
• Go into the bank - Withdraw cash over the counter
• Write to your MP - it may work!
• Switch your account to a mutual as a protest.
• How much? - If you have to use a 'surcharging cash machine' and its likely that you will have to again in few days then take out what you will need for several days.
• Never spend money!

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