LINK's response can be downloaded here
There are over 100 million UK issued LINK-enabled cards in circulation, which can be used in almost every ATM in the UK, nearly 70,000 machines. A record number of over 55,000 of these ATMs are free-to-use and they account for 98% of all cash withdrawals. The LINK network is a fundamental part of the UK's payments infrastructure and cash machines are by far the most popular channel for cash withdrawals in the UK, used by millions of consumers every day. The total value of LINK cash withdrawals can exceed £10 billion a month and, at its busiest, LINK has processed over 20,000 transactions a minute.
LINK’s role is to support consumers’ access to cash for as long as they need it.
As consumers have increasingly used digital means to make payments so the demand for cash to finance transactions have fallen. If transactions, where customers use their own banks’ ATMs are included, the number of cash withdrawals from ATMs has fallen by 10% since the peak recorded in Q3 2015. LINK’s most recent figures show a 6% year-on-year decline.
UK Finance report consumers’ use of cash for payments has been in decline since the early 1990s. For example, in 2006 cash accounted for 62% of all consumer payments. In 2016, 44% of the 15.4 billion consumer payments made was in cash. Hence, usage of cash for payments by consumers has dropped 33% over the last ten years. It is forecast to drop a further 43% over the next decade to account for 24% of all consumer payments by 2026.
The public interest is best served by there being access to all forms of payment. Payment by cash should not be restricted.
The average cost of a withdrawal from an ATM is around 25p. Consumers do not pay to use the vast majority of ATMs but ultimately do bear the cost of the provision of ATMs, currently around £1 billion a year through other charges or lower interest received on the credit balances. As transactions fall the unit cost may well rise.
Around 2.7 million people are heavy users of cash, relying on physical cash and ATMs for their spending and budgeting. ATMs are particularly concentrated in low income areas as a result of the reliance on cash by this group.
LINK is developing its well-established Financial Inclusion Programme to ensure that the geographical spread of ATMs is maintained in the face of a probable steady reduction in total ATM usage.
LINK has established an Access to Cash Review to consider consumer requirements for cash over the next five to fifteen years, and the long-term development of the LINK payment system to address this. The Review has an independent Chairman in Natalie Ceeney CBE and eight Members with consumers and industry expertise. The Review will meet in 2018, all stakeholders including members of the public will be able to submit evidence, and it intends to publish its report in early 2019. This should complement this Treasury study.