END OF FREE ATMs 2

The future of free cash withdrawals is under growing threat. The prediction from the Nationwide came after the Royal Bank of Scotland, 83% taxpayer-owned, announced plans to stop its one million “basic” RBS and NatWest account holders from using other banks’ ATMs. Up to 4.2 million customers of Lloyds, which is 41% taxpayer-owned, are already penalised in the same way. The banks say it is “unsustainable” to offer free access to other ATMs because they have to pay a charge per transaction, thought to be around 25p. So why are WE charged up to £1.75 per transaction?

Bosses at the Nationwide, which led a campaign against ATM charges in 1999, fear other banks will follow suit and put free cash withdrawals at risk. Spokesman Gary Follis said, “NatWest and Lloyds are threatening the whole future of universal access to cash machines by restricting usage.” Labour’s shadow treasury minister Chris Leslie added, “I am worried that ­millions of the least well- off across the UK will now be deprived of a ­fundamental financial service.” (Source: Sunday Mirror, Aug/11)

Banks have been offered a multi-million pound bounty to sell thousands of their free cash machines to firms which impose a charge. They could each collect tens of millions of pounds by agreeing to sell the machines, which are not outside their own branches, to charging operators. The move would decimate the national network of free machines and leave customers facing charges totalling £800m a year to access their own money unless action is taken. The number of charging machines has grown from virtually nil to 21,000 over the past four years, around 40% of the 50,000 total. The 21,000 figure equates to 61% of all machines in so-called remote locations, away from the bank branches.

Halifax Bank of Scotland has already set the trend by selling more than 800 free machines for £50m to Cardpoint, which typically charges £1.50 for each transaction. Some 250 of these have already been switched to charging with more to follow. There is now evidence that other banks are being offered big money to follow suit. The details were revealed by Stuart Bernau, executive director of Nationwide building society, to MPs on the Treasury Select Committee, which is investigating threats to the free cash machine network. He said firms which operate charging machines are involved in an aggressive battle to expand their network at the expense of free machines. Bernau said the Halifax deal with Cardpoint appeared to be part of much bigger behind-the-scenes manoeuvring.

"We received a letter from one of the charging machine operators, inviting us to, perhaps, consider the same route," he said. "I can only imagine that, if we were receiving letters like that, then all the main card operators were receiving letters inviting them to consider selling part of their remote network." It subsequently emerged that Cardpoint, which saw gross profits rise 204% in 2004 to just under £7.8m, was behind the letter. Charging firms are also offering inducements to site owners, generally some sort of cash payment per withdrawal, in order to drop free machines and allow them to move in, Bernau said. He said it was only media attention, coupled with complaints from MPs and consumer bodies, that has reined in the spread of charging machines.

Nationwide is calling for clear warning signs on machines which charge, a 30-day notice period when a free machine is switched to charging and a cap of £1.50 on fees. Labour MP Angela Eagle said, "We have seen this growth of so-called convenience charging machines. There are worries that there is a stealthy, slippery slope towards ATMs charging." MPs are concerned that more than 75% of the 2,500 ATMs in post offices carry a charge of £1.50, which totals £10m a year. They are worried that pensioners and those on benefits are being hit particularly hard. Post Office bosses told the committee they do not have the money to subsidise free machines.

Stephen Timms, the Financial Secretary to the Treasury, refused to accept the rise of fee-charging machines is a problem. He told MPs that, while there are more machines which charge, there has also been a small increase in the number of ATMs which are free. In fact, virtually all new free ATMs are in busy town centre locations, rather than remote areas. The number of free machines in remote locations has fallen by 500 in a year. ( Source: Mail on Sunday)

Moneybox, one of the UK's largest operators of fee-charging cash machines, has launched a push into shopping centres for the first time. The move appears to conflict with previous arguments from the industry that charging ATMs would only be put in locations that were uneconomical for banks to operate. It adds to fears that free machines may disappear as those operated by private operators, such as Moneybox and Cardpoint, continue to expand. The number of charging machines has grown from virtually nil to 21,000 over the past four years, nearly 40% of the 54,000 total. Of 8,000 new cash machines in Britain in 2004, 7,247 were fee-charging.

HBOS set the trend in 2004 by selling more than 800 free machines for £50m to Cardpoint, which typically charges £1.50 for each transaction. Moneybox, which said it had seen a surge in transaction rates from its machines during the second quarter of the year, has previously argued that its machines provide a 'convenience' service in areas where free machines are scarce, such as remote locations, motorway service stations and small convenience stores. But in a trading statement, the company said it will begin a roll-out programme of new machines during the second half of the year.

A spokesman said, "We are looking at highly pedestrianised areas such as town centre shopping arcades where the number of free ATMs are diminishing. We're not talking about putting the machines on Oxford Street but in areas where there is a lack of free machines." He added Moneybox will consider locations formerly occupied by phone boxes which have been withdrawn as more people use their mobile phones. While machines offered by banks and building societies are free, a handful of private companies have launched in the past five years, putting machines in locations that would otherwise be uneconomical. These 'convenience' machines tend to be found in petrol stations, corner stores, pubs and nightclubs.

It is estimated the cost of taking money from the ATMs, which typically charge between £1.50 and £2.00 to withdraw cash, will grow to £200m in 2005. Nationwide, an avid campaigner against the machines, said the onslaught of fee-charging ATMS into the High Street was inevitable. Spokeswoman Rosemary Callendersaid, "The original idea of these machines was to target areas where it was not viable to have free machines but the operators increasingly want to be where the consumers are and that means the High Street." The fee charging companies defended the machines during a recent Treasury Select Committee investigation into the market by claiming the machines are usually some distance away from free machines so it would be costly and inconvenient for people to travel to a free one.

Consumers should be helped by new rules coming into force on Friday that will make it easier to identify fee-charging machines. ATM umbrella body Link will require operators to show how much a customer will pay before they insert their card and introduce warning signs in shops that advertise cash machine services. Moneybox executive chairman Peter McNamara said pre-tax profits had seen strong growth in the first half of the year compared to the same period in 2004. He said, "The recovery in daily UK ATM transaction rates first reported at the AGM has continued, with daily transaction rates for the second quarter of 2005 ahead of those achieved in the first quarter." (Source: Mail on Sunday)

<<< Prev