The relentless rise in the cost of withdrawing our own cash

Despite the uproar three years ago, fee-charging ATMs are still proliferating

The cost of getting your hands on your own money from fee-charging ATMs is on the rise, with a growing number of cash machines across Britain now charging upwards of £2 for each withdrawal.

According to Link, the company behind Britain's ATM network, there are now five machines in the country that charge a massive £10 per transaction, and more than 30 with charges of £3 or more. Although the majority of the most expensive machines are installed in nightclubs and lap-dancing bars, high charging ATMs are now also creeping on to cross-Channel ferries and into concert venues, conference centres and regular pubs.

"The average fee among charging machines in the UK is now about £1.62," says Graham Mott of Link, "whereas it was around £1.56 just two years ago, so it has been creeping up."

Consumers remain polarised in their views about the sudden proliferation of charging machines in Britain over the past few years. While many feel strongly that they should never be charged for getting their hands on their own money, others like the convenience of fee-charging ATMs, and are happy to occasionally pay a few pounds, if it saves them time.

There are now some 26,000 charging ATMs in the UK, an increase of around four times since 2001, compared with around 35,000 free machines. However, the growth in charging cash machines seems now to have levelled off. Last year, only a thousand new charging machines were installed in the UK, while the banks put in some 2,000 new free machines.

Transaction growth has also levelled off. In 2006 Britons made on average 9 million transactions a month at charging machines, about the same as the year before. However, free cash machines handled around 240 million transactions in 2006, up from 236 million in the previous year.

The reignition in the growth of free cash machines has, in part, been helped by a political backlash against the charging operators three years ago. A lengthy Treasury Select Committee (TSC) inquiry into the sector forced charging operators to make it much clearer that their machines would charge customers. Furthermore, the banks agreed to stop selling large bundles of their free machines on to private operators.

Nationwide Building Society, which has been at the forefront of the campaign against charging cash machines, believes that the numerous inquiries into ATMs, and the media campaign against charging machines has been largely responsible for stemming their growth.

"The sheer weight of media coverage and the TSC inquiry forced the banks to rethink what they were doing," says Stuart Bernau, Nationwide's executive director. "There's been a lot more competition to get hold of the high-footfall ATM sites, as the banks have started to concentrate on maximising the income they get from interchange fees. And private operators haven't been able to get their machines in to prime locations."

Bernau concedes that there will probably always be a demand for charging ATMs, where the convenience merits the cost, but he insists that consumers still dislike charging machines.

While the debate about the value of charging ATMs will inevitably rattle on, one area of consensus following the various recent inquiries was that people living in the most deprived areas of Britain should not be left to rely on charging cashpoints.

This kick-started a sprint to win the mantle of "most charitable" bank, with most of the big high-street names announcing initiatives to install new free machines in deprived areas. Link also got to work drawing up a map of all the poorer areas in the country that did not have a free cash machine within 1km of their centre. Around 1,700 areas have been highlighted, and the banks have already set about putting new machines into these districts.

But will such altruism last? With the banks now under pressure to cut down on unauthorised-overdraft fees and late-payment charges, some believe it is now only a matter of time before they are forced to start recuperating charges at the cashpoint again.

"In the US, current-account packages will quite often include a certain number of free withdrawals, after which you have to pay," says Mott. "So the banks could eventually go down that kind of route here. But I don't think you'll ever see customers having to pay to withdraw cash from their bank's own machines."

Bernau believes that while it is unlikely that free bank accounts will ever disappear, it is likely that many of the features that customers take for granted will be withdrawn. Already, some larger banks have increased charges for cash withdrawals or debit-card transactions overseas, while banks may also eventually start charging for statements, chequebooks and regular electronic transfers.

For the moment, however, most consumers enjoy free banking, and are rarely left with no choice but to use a charging cash machine. With the introduction of contactless debit and credit cards later this year, consumers will eventually be able to make small transactions by simply swiping their card over a reader – like the Oyster-card system on London's Underground. And for larger transactions, there is almost nowhere where you can no longer pay by card. Perhaps the days of cash are numbered.

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