More ATM closures predicted following fee reduction

Yesterday (Sunday, July 1st), ATM fees in the UK were reduced from 25p to 20p per withdrawal – the first of several fee reductions scheduled to take place annually until 2021.

While this might not seem like a dramatic reduction at first glance, the move is expected to prompt further closures of ATMs across the country. Providers view ATMs as an additional expense to maintain, one which might not be necessary in an increasingly cashless society. Research from Which? earlier this year revealed that 300 ATMs are closing every month, prompting a debate as to whether ATMs will be with us for much longer.

ATMs are also pose more of a risk to providers, as they can be broken into – in 2016, such attacks increased across Europe by 287% on the previous year, according to a survey by EAST – or, as in a recent case in India, chewed into.

“The UK is moving to Digital Payments for purchases from merchants and for paying each other, gradually replacing cash. This means that over time, ATM operators will receive less income for this channel, which will result in less innovation at the ATM causing digital methods to look more attractive,” Dean Wallace, Practice Lead, Real-Time & Digital Payments, ACI Worldwide said.

“The problem is that the move to digital is not completely omnipresent across society, and some user groups will be impacted by the obvious reduction in ATMs that will occur. That said, access to cash will still be available over the counter at both the Post Office, and convenience stores, such as the Co-Op. Cold hard cash is accepted almost everywhere, and as we saw with the recent chaos brought on by Visa and TSB outages, it comes in handy because cash can’t “crash”.”

“Consumers simply demand choice, and financial institutions need a flexible and robust capability to ensure they can meet the varying demands of consumers.”

For many, cash is still an essential. Many workers, especially those employed in the gig economy, are still paid in cash.

“For all the postulating that less cash is better, and even that no cash is best, the future of cash isn’t in the hands of tech companies. It is in the hands of businesses, and even more importantly in the hands of consumers. And whilst data does indicate that UK consumers’ relationship with cash is changing, it does not indicate that they are willing to abandon cash altogether,” Oscar Nieboer, Chief Marketing Officer, Paysafe, told PaymentEye.

“Whilst 1.5 million adults in Britain do remain unbanked today, financial inclusion is not the same issue in the UK that it is in other countries, although this is certainly a factor to consider particularly as the value of ‘wages’ paid into the gig economy (of which a substantial percentage is cash) continues to increase. But what will play a more significant role in the UK consumers’ appetite for a cashless economy is the perception of the competing forces of risk and convenience generated by new technologies such as contactless cards and mobile wallets, and where consumers feel comfortable on the spectrum between the two.”

“Undoubtedly cash remains alive and well in the world of payments, and it will continue to be a vital element of the financial landscape even as payments become increasingly digital.”

But the divide isn’t quite as clear as ‘cash’ or ‘cashless’. The relationship is more nuanced, Nieboer argues.

“In an always-on connected world, digital and frictionless payment methods are inevitably playing a more significant role in consumers’ lives, but cash continues to offer familiarity and unrivalled security”, Nieboer said.

“ATM closures represent one aspect of consumers’ changing relationship with cash, but the story is more complex and in part we’re seeing this being offset by the migration of cash-based solutions to the digital world.”

“This migration is important to consumers. Our Lost in Transaction research found 63% of consumers feel uncomfortable storing their financial information online, worries which digital cash-based solutions are easing. For example, pre-paid cards and digital cash services allow consumers to convert cash into digital currency to pay for goods and services, online and in-store, without having to provide bank or credit card details to merchants.”

“Digital cash-based solutions strike a crucial balance between security and seamlessness. These methods champion the millions of consumers who prefer to use cash, and enables them to spend that cash safely online.”

Related reading