Nearly one in five free Scottish cash machines to introduce charges

That is the stark warning from the ATM Industry Association as it emerged the rate of cashpoint closures in Scotland has shot up in the last year.

The non-profit trade group, whose members include banks such as HSBC, independent ATM operators and payment systems such as Visa say the problem revolves around a 10% or 2p cut in the fee that the bank pays cash machine operators every time money is withdrawn.

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And they have warned that the move to charging cash machines will increase if LINK, which oversees the UK's largest cash machine network, moves to cut the fee even further.

It's understood LINK is looking at the possibility of a further fee cut as part of a review which is due to be completed at the end of 2020.

Ron Delnevo, the association's executive director for Europe has pledged to get all his independent members to switch charging machines back to free if that interchange fee cut is axed within six months, or he would quit.

"Independent ATM operators are running the last ATM, or last one or two ATMs in town in Scotland . With LINK's cuts in interchange making these ATMs uneconomic to operate on a free-to-use basis, many will be switching to charging this year, leaving many of Scotland’s villages and smaller towns without free access to cash," he warned.

"The situation is bad. And it is going to get worse."

LINK do not believe that the current 2p cut justifies the imposition of charges of a pound or more at ATMs.

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But according to a study by the association Scotland is the second most at risk area in the UK in terms of the threat to free cash machines. Glasgow is one of the five worst affected areas outside of London.

Meanwhile the number of cash machines in Scotland have gone at a rate of 32 a month in the 11 months to April There are now 6008 cashpoints in Scotland, with 359 ATMs gone over 11 months.

In the 11 months to November, last year, they were going at a rate or 28 a month.

Scotland has seen over 400 bank branches close since 2015, making it one of the worst affected areas in the UK, and often the cashpoints will also go. Banks who have made the cuts consistently say that it is the result of customers preferring to use online, mobile or telephone banking while usage of branches has fallen.

Mr Delnevo said: "There are lots of small towns or villages in Scotland where there is only one ATM left and it is operated by an independent operator, as banks close their branches and don't leave their ATM behind."

He says the decline in the ATM is a symptom of a relentless push towards a cashless society which he says is not in the public interest.

Consumer organisation Which? predicted free cash machines could become a thing of the past after it emerged that 1,700 UK ATMs switched to charging in the first three months of this year alone.

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Most of the ATMs affected were operated by Cardtronics – the world's largest non-bank ATM operator – which warned it is likely to convert a further thousand machines to charge fees in the coming months.

NoteMachine, another major cash machine provider, has also said it is considering converting up to 4,000 of its 7,000-strong network to fees.

Fees charged consumers are at least 95p per withdrawal and it is estimated with nearly one in four charging machines the fee rises to between £1.50 and £1.99.

LINK says it is committed to protected free access to cash, and that less than three per cent of withdrawals currently incur a fee.

Mr Delnevo said: "LINK won't cancel the cut, because they have been forced into the position, having been told by the banks that they need to save money. But I would argue the banks are saving so much money by closing bank branches why do they need to close the ATMs too.

"They are making ATMs uneconomic to operate on a free basis by slashing the interchange fee. LINK are fond of saying it is just 2p, but because operating the ATMs is uneconomic, that 10 per cent cut wipes out the margin. It is not true that operators are creaming it, because every single transaction is losing operators money, so what they have to do is switch to charging.

"And if they charge, they lose 70-80 per cent of their transactions, because most people don't want to pay. And it does not matter how much you charge, because people just are not happy to pay out of a point of principal. "And now people are going to be forced to use cards increasingly because there is not cash available. A LINK spokesman said: "Scotland continues to have excellent coverage of ATMs and Post Offices, where consumers can continue to access their cash for free.

"Cash use is declining and LINK will continue to provide free access to cash for as long as people need it, but we need to look at the recommendations of the recent Access to Cash Review."

That Access to Cash Review in April warned that the UK’s cash system is “on the verge of collapse” , finding that more than eight million adults would struggle to cope in a cashless society.

It said companies and organisations providing essential services should be required to ensure that consumers can continue to pay by cash.