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Last Updated: Friday, 28 July 2006, 08:03 GMT 09:03 UK
Q&A: Cash machine charges
A person entering a PIN number
About four out of ten ATMs charge users
Charities have warned that cash machine charges hurt poorer consumers. BBC News looks at why more people are being charged to use cash machines.

How many cash machines charge?

Nationwide, which has campaigned against the spread of fee charging ATMs, estimates that more than a third of cash machine charge a fee.

UK banks offer free ATMs in their branches and some other locations, while fee charging machines tend to be located in petrol stations, bars and newsagents.

Overall, there are more than 54,000 ATMs in the UK, an estimated 22,000 of which charge.

In total, providers such as Moneybox, Cardpoint and Hanco charge consumers up to 140m a year to use their ATMs.

A table

There are plenty of free ATMs about, so why are charities getting hot under the collar?

The research from Nationwide indicates that the encroachment of fee charging ATMs is gathering pace.

During the first seven months of 2004 the number of fee charging ATMs grew by 29%. At the same time, the number of free machines grew by 0.3%.

Banks such as Halifax and Abbey have sold off ATMs located in petrol stations and other non-branch locations to the fee charging providers.

MPs have said that they are concerned that people without easy access to transport have no option but to use fee charging ATMs, particularly as many rural UK banks and post offices have shut in the past few years.

In addition, consumer groups are worried that card holders are not being made properly aware that ATMs they are using charge for withdrawing cash.

What warnings are consumers given that they are going to be charged?

A notice stuck on the outside of the ATM alerts consumers to the fact that it charges a fee, typically of about 1.75 per withdrawal.

In addition, an on-screen message tells users that if they withdraw cash a fee will be incurred.

The providers of fee-charging ATMs say this amounts to a "belt and braces" approach and that users are aware that that their machines charge.

However, MPs on the Treasury Select Committee have said that the warning stickers are often hidden away and on-screen alerts can occur just prior to when the user withdraws cash, rather than at the start of the process.

How is an ATM fee justified?

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 that 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.

The providers point out that the fees charged are vital to keeping the ATMs in place. If a fee was not charged then there would be no ATM, the providers say.

Even critics, such as Nationwide, do not want an end to fee-charging ATMs. Instead, they are looking for greater controls over their location and more effective alerts over fees charged.

But last year the powerful Treasury Select Committee drew a line in the sand when, in a report, it called for more prominent warning signs. John McFall MP, Treasury Select Committee chairman, has described the spread of fee-charging ATMs as a "very worrying trend".

MPs are unhappy that the banks are selling their remote ATM sites - non-branch based cash machines - to fee-charging providers.

Could we eventually see the end of free ATMs?

The UK's network of free ATMs is unlikely to disappear anytime soon.

UK banks have pledged that they will not start charging their own customers to use branch based ATMs.

In 2000 consumer groups mounted a high profile campaign to persuade the big banks from charging customers for using ATMs.

Back then, banks were keen on introducing "disloyalty" charges for customers who used rivals ATMs.

But they backed down in the face of a storm of public protest.

However, the growth in numbers of fee charging ATMs is not showing any signs of selling.

Charging ATMs 'must be labelled'
31 Mar 05 |  Business
Cash machine charges 'escalate'
20 Sep 04 |  Business
Cash machine revenues hit 140m
16 Dec 04 |  Business
Cards 'more popular than cash'
07 Jul 04 |  Business

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