This week, we scored a significant victory in the fight to protect the UK’s access to cash. The Link scheme has cancelled planned cuts to the “interchange” fee which banks pay towards the cost of running the UK’s network of cash machines.
As our recent report ‘The Future of Cash’ explains, cash is relied upon by over two million people in the UK, and used regularly by millions more. Most people get hold of cash via ATMs, and a Positive Money poll found that 77% of Britons view access to a free-to-use ATM as essential to their lives.
Cash machines are under threat because of moves by banks to reduce the amount they contribute to funding the network, combined with card companies’ efforts to make machines unprofitable. Link currently connects almost all of the UK’s ATMs, but banks have threatened to leave for alternative schemes operated by Visa and Mastercard, which set lower fees. If one of the major banks were to make the switch, it would likely make a large chunk of the ATM network unviable.
Visa and Mastercard have a clear interest in discouraging cash use; the former has spent millions on its “cash is awkward” ad campaign, and has even paid US retailers to stop accepting cash.
It looked like Link had relented to banks’ pressure, announcing cuts to the interchange fee of 5% a year until 2021. This would have put the future of thousands of machines in doubt, and research by Which? found that in the aftermath of the announcement, ATMs have been disappearing at an unprecedented rate.
But Link’s decision was faced with an outcry from campaign groups including Positive Money. We highlighted the dangers of Link’s decision in the media and worked with MPs to raise the issue in Parliament.
Link has partially reversed its decision, cancelling the cut planned for 2020, and placing the fourth, scheduled for 2021, under review. It is encouraging to see Link recognise the threat to the UK’s ATM network, and the damaging effect of slashing banks’ fees.
However, the fight is a long way from over. The first and second cut, taking effect this year and next, will remain in place and banks will continue to put Link under pressure. We need a long-term solution to guarantee that people are able to access free ATMs for as long as they choose to use them.
That’s why Positive Money is calling for a reversal of these cuts, and for interchange fees to be calculated under the oversight of the Payment Systems Regulator. This should apply across all schemes, to prevent a “race to the bottom” provoked by Visa and Mastercard. There are powerful forces threatening the future of cash, but this week we’ve shown that they can be overcome.
