 Charges penalise people on low incomes, campaigners say |
Cash machine charges are "grossly disproportionate", consumer groups told a Treasury Select Committee hearing. Nearly four out of ten ATMS now charge consumers for cash withdrawals and Tuesday was the Committee's first hearing into these charges.
Consumer groups told MPs that people on low incomes had poor access to free ATMs and frequently paid ATM fees.
However, Link, the company which operates the UK's cash machine network, said new rules made charges clear.
 |  Consumer groups are worried that card holders are not being made properly aware that some ATMs charge for cash withdrawals  |
Fee charging growth
There are more than 55,000 ATMs in the UK and an estimated 22,000 of them charge, according to the Association of Payment Clearing Services (Apacs).
Recent research from Nationwide building society found that the number of fee-charging ATMs grew by 29% during the first seven months of 2004 while the number of free machines grew by just 0.3%.
Fee-charging cash machines typically charge users between �1.25 and �1.75 a transaction.
Providers such as Moneybox, Cardpoint and Hanco charge consumers up to �140m a year to use their cash machines.
These machines are often located in petrol stations, pubs and convenience stores.
Consumer anger
Free non-branch based ATMs could soon disappear, Lawrence Baxter, senior policy officer at Which, told MPs.
Link has however denied this claim.
Mr Baxter said that banks such as Halifax and Abbey have sold ATMs located in non-branch locations to the fee-charging providers.
Mr Baxter told MPs that the fees charged were "grossly disproportionate with the costs of the transaction."
Consumer groups said that the charges hit people on low incomes hardest, as they make smaller and more frequent withdrawals.
Citizens Advice financial skills adviser Jenny Hickson told MPs that in Speke, a socially-deprived area in Liverpool, free cash machines were too far away for those without access to a car.
"They have the choice of the using the machine in the post office which charges or walking a mile and a half to the nearest free machine," Ms Hickson said.
The last bank branch had closed in Speke in 1998, Ms Hickson added.
Reforms
| WHAT IS THE LINK NETWORK? The vast majority of banks in the UK are part of the Link network Each year Link calculates the average cost per transaction for all providers. This is called the interchange fee and is the amount each provider is paid for handling transactions for another company's cardholders. However operators who charge for withdrawals are not entitled to receive this Link interchange fee Nationwide says that if this agreement ended, banks would forge their own agreements causing confusion among consumers. |
Consumer groups have a wish list of reforms. It includes:
- Warning stickers on the outside of ATMs and clearer on-screen messages to ensure consumers know which machines charge
- Citizens Advice said they wanted ATMs in post office to be free, so that people on benefits could access their cash without facing a charge
- Which said cash machine fees should be capped
- All groups wanted fee-charging ATM providers to sign up to the Banking Code.
Link told MPs that the cash machine providers had already made charges more transparent. Link ruled last April that fee-charging machines must either have stickers or on-screen messages warning users that they are about to be charged.
Card scheme director Howard Aiken told MPs that from next June, these messages would occur at the start rather than the end of the cash withdrawal.
Providers may be asked to appear at later hearings of the Committee.
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