Link ATM network calls halt to interchange fee reductions
Link, the U.K.'s primary ATM network, has given ATM operators and end-users a "semi-reprieve" from a program of deep cuts to interchange fees that support free-to-use ATMs.
The phased plan that went into effect in January called for the ultimate reduction of interchange from 25 to 20 pence per transaction. This 20 percent cut was widely expected to precipitate the closure of up to 10,000 ATMs across the country, particularly in rural areas, which would no longer be viable.
The first reduction of 5 percent in Interchange took effect July 1; the second is slated for January 1 and will go forward as planned. However, Link announced on Monday that it will cancel the third reduction due in January 2020 and put on hold a fourth, due in January 2021, pending further review next year.
Link cited a 6 percent drop in the volume of ATM transactions as the reason for the change of plan. However, the network also has been under intense pressure from accountholders, consumer groups, independent ATM deployers and various members of government to reconsider its plan.
A statement by Link Chief Executive John Howells said that:
Link is committed to maintaining the U.K.'s extensive coverage of free-to-use cash machines for many years to come. However, many consumers are turning to alternatives to cash more quickly than expected and usage of ATMs is now dropping at 6 percent per annum. Link will therefore adjust interchange to maintain free-to-use coverage in line with our commitments to the public and to our participants. Link will continue to monitor the cash machine network carefully and will not hesitate to make further changes as needed to protect U.K. consumers.
In an email to ATM Marketplace, Jim Tomaney, chief operating officer at payments specialists Renovite Technologies, suggested that the industry might offset Link fee reductions by swapping out older ATMs with modern terminals featuring advanced functionality:
Much of the technology that currently underpins the ATMs we use on the high street is outdated, having largely been developed in the 1980s. This makes adding any new functionality to ATM machines a less appealing prospect for suppliers as the cost of adding anything innovative is perceived as too high. However, the fact of the matter is if they updated their technology, they could do more at a lower cost than under the current infrastructure.
If current ATM technology was more appropriate to the kind of services consumers have come to expect in 2018, far beyond simply withdrawing cash, it is likely we’d see ATM usage increase. The consumer experience could be as good as going into the bank itself and speaking with someone who actually works there.