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All-Party Parliamentary Group on Small Shops: ATMs – Impact on Businesses and Consumers

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All-Party Parliamentary Group on Small Shops: ATMs - Impact on Businesses and Consumers
13:30 - 15:00, Tuesday 10th July 2018, Jubilee Room off Westminster Hall
Ruth George, High Peak
Nia Griffith, Llanelli
Emma Little-Pengelly, Belfast South
Teresa Pearce, Erith and Thamesmead
Jamie Stone, Caithness, Sutherland and Easter Ross
Liz Twist, Blaydon
Sammy Wilson, East Antrim
Chris Hall, Actsmart
Steve Dowling, Association of Convenience Stores
Edward Woodall, Association of Convenience Stores
Ruby Peacock, Federation of Small Businesses
Graham Mott, LINK
Matthew Cherry, Payment Systems Regulator
John Mowat, Payment Systems Regulator
David Clarke, Positive Money
James Bailey, Responsible Finance
Matthew Ogg, Revo
Richard Piggin, Which?
1. Welcome and introductions
Ruth George MP opened the meeting and welcomed delegates. She outlined the agenda and how ATM provision is changing in her constituency. She highlighted that MPs could use the LINK ‘Suggest a Site' tool to nominate locations for new ATMs with support from local business.

Graham Mott presented an overview of LINK's decision to cut interchange fees. The decision has been made to reverse the saturation of ATMs in urban locations as cash withdrawal transactions decline. The Financial Inclusion Programme (FIP) subsidy for ATMs in deprived areas has been tripled and every FTU ATM 1km or further from the next FTU ATM is exempt from interchange fee reductions.
LINK will protect access to cash for as long as consumers demand it and the impact of interchange fee cuts so far has been a reduction in PTU ATMs and increase in FTU ATMs. 30% of all ATMs are hosted by convenience stores and 30% of all consumer payments are made by cash, which is expected to drop to 18% in ten years. LINK has established an independently-chaired Access to Cash Review, which will consider consumer requirements for cash over the next 5 - 15 years and how to retain nationwide access to cash through alternative methods of cash acquisition.

Ruth George MP said that finding retailers to host new ATMs is becoming more difficult due to rural ATM crime. LINK stated that retailers can find out if their ATM is eligible for the FIP by either contacting their ATM operator or LINK directly. LINK will be submitting monthly reports to the Payment Systems Regulator (PSR) on the number of ATMs further than 1km from another ATM to monitor national coverage of the network.

3. Panel Session

Ruth George MP introduced the panellists; Edward Woodall from the Association of Convenience Stores, Ruby Peacock from the Federation of Small Businesses and Richard Piggin from Which?.

Edward Woodall said that interchange fee cuts are occurring alongside bank branch closures when PSR modelling shows the interchange fee cuts are expected to impact rural ATMs most. Declining fees are forcing retailers to consider the future of their ATMs; including whether to switch to a customer-charging model or remove their ATMs altogether. 2.7 million consumers are reliant on cash as a payment method and ATMs facilitate consumer spending on high streets. Edward called for transparency around use of the FIP and LINK's monthly reporting to the PSR.
Ruby Peacock outlined the transformative effect of digital payment services, but that card payments for low value transactions are expensive for merchants. FSB research shows more than half of small businesses are over 1km from their closest FTU ATM. The FSB-Which? ‘Save Our Cashpoints' campaign is calling for the PSR to conduct a full market review of access to cash.

Richard Piggin welcomed pledges from LINK to provide updates on its FIP and publish its monthly coverage reports to the PSR. Which? raised concerns that LINK's decision to cut fees could be driven by commercial reasons, undermining its commitment to retain national access to cash. Which? highlighted that vulnerable consumer groups often use cash as a budgeting tool.

Revo raised the potential impact of the court case on business rates for ATMs, a significant cost to merchants supplying ATMs. Liz Twist MP asked about the impact of Post Office banking services on access to cash, which are not available outside opening hours. Ruby said that the market share of Visa and Mastercard means they can dictate the cost of card payments, possibly encouraging LINK to reduce its fees.

Ruth George MP asked the panel what the PSR should do on ATMs. Ruby said ATM closures should be monitored closely, Edward called for transparency on the FIP and monthly reporting and Richard called for the PSR to examine ATM scheme competition.

4. Payment Systems Regulator

Matthew Cherry and John Mowat explained that the PSR has required LINK to protect national coverage of the network, review the impact of each interchange fee cut annually and bolster its FIP.

These requirements followed PSR research on the potential impact of interchange fee cuts, which found that the cut to fees plus declining volume of ATM transactions would disproportionately harm ATMs in rural areas. LINK's monthly reporting will provide almost real-time information on changes to the network and the PSR will conduct further research with businesses and consumers to understand their use of cash and how they access cash.

The PSR does not have a remit on the number of ATMs and has not set thresholds for when it would intervene if significant changes to the ATM network occur. The PSR were asked how they classified out-of-order ATMs. LINK requires its ATMs to be operational 98% of the time and the PSR will consider the impact of ATM downtime further. The PSR confirmed LINK would publish its first monthly reporting stats on its website by the end of July on the number of ATMs covered by its FIP and what they are doing in locations where access to cash is threatened.
5. Overview and Close

Ruth George MP reiterated the importance of access to cash for local communities. She thanked delegates for attending and closed the meeting.



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