Will charging cashpoints be skewered?

They're on the rise and you'll find them in kebab shops and pubs, but Sam Dunn asks if an inquiry will bring them to heel
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The Independent Online

The battle for the "heart and soul" of cash machines is about to get brutal. On Tuesday, an inquiry will be launched into fee-charging "convenience" machines that typically levy form £1.25 to £2 for withdrawls.

It will be led by the Treasury Select Committee, the parliamentary body that has previously lambasted other members of the financial services industry appearing before it. These include the Barclays Bank's former chief executive, Matt Barrett, who confessed that bank credit cards were expensive.

"We will be looking at the issue of transparency [over fees]," says committee chairman John McFall. But if that sounds dry, the debate won't be.

Fireworks have been going off ahead of the start of the inquiry, with the Nationwide building society accusing competitors of selling ATMs to fee-charging operators. This, it claims, is undermining the free network run by societies and banks.

In turn, the charging cashpoint operators robustly defend their right to levy a fee for a convenience ATM - whether it's located in a petrol station, kebab shop, nightclub, bar or rural village store.

Such ATMs are costly to run and maintain, they say, pointing out that the expense of paying security guards, for example, to restock machines is more onerous for a private operator than for a bank. They also claim that they are providing a service in areas where banks do not offer a cashpoint.

The Nationwide shored up its own argument on Thursday by unveiling research charting the rise of fee-charging ATMs. In the 12 months to September this year, it reports, people paid £140m in fees to withdraw their cash from these machines - more than double the figure in 2003.

There are now 19,700 charging ATMs in the UK, against 32,350 free ones, which means that almost two in every five machines carry a fee, according to the Nationwide. If this rate of growth continues, warns Stuart Bernau, a director at the Nationwide, free cashpoints could end up in the minority. The Nationwide also disputes a key argument for fee-charging machines - that of service to otherwise isolated areas - since around 1,600 lie within 100 metres of free machines, it says.

But the independent operators maintain that the machines provide a service in areas where banks have either pulled out or are unable and unwilling to provide an ATM.

"People want cash at their convenience. They don't want to have to go and find it elsewhere," says Ron Delnevo, managing director of Bank Machine, which runs 1,000 ATMs across the country.

His company, and other independent operators, point out that dissatisfied customers can always vote with their feet. In many cases, they do. Despite the rise in charging machines, some 97 per cent of us continue to use the free high-street cashpoints.

And not all new ATM sites are being snapped up by the money-makers. A few weeks ago, Yorkshire Bank beat competition from fee-charging rivals to secure two new cashpoint locations that will be free to users.

The Treasury Select Committee inquiry will look at these arguments but its focus will be on the issue of transparency. Fees usually vary from £1.25 to £2, and convenience machines are supposed to provide early warnings of this charge through either a sticker or an on-screen message that comes up before the transaction takes place. Often, however, the sticker is missing, the on-screen alert overlooked and many users mistakenly believe that the Link network logo means there will be no charge.

While all sides agree there is a case for a charging machine in a badly served location, concern is growing over the "moral" issue.

"With pensions and other benefits now going into bank accounts, it's often people who can least afford it paying the most for their cash," says Janice Allen of the National Consumer Council (NCC).

For example, someone with no choice but to visit a nearby fee-charging ATM could face a £1.75 charge. So a £10 withdrawal would mean paying an extra 17.5 per cent just to gain access to their own money.

Even pulling out £20 would mean a fee of 8.75 per cent, and in isolated rural communities and inner cities where banks and post offices are thin on the ground, it's pensioners and the poor who will suffer most.

"It's very important that people are given free access to their own money," says Ms Allen. The NCC will be interviewed by the Treasury Select Committee on Tuesday and is expected to request an ATM "map" from Link that shows exactly where free cashpoint "deserts" are located.

It is also expected to float the idea of a label on machines informing users that, while the ATM in front of them is a fee-paying machine, there is a free one 400 yards away.

Link and the consumer bodies Which? and Citizens Advice will also appear before the select committee on Tuesday. The independent ATM operators and other organisations, including the Post Office, will be interviewed early next year. The committee will be keen to analyse why more than seven out of 10 ATMs in post office branches now charge a fee. Other issues will include the ownership of the independent ATM operators. Hanco, with 5,000 charging machines, was recently bought by the Royal Bank of Scotland.

Only five years ago, all ATMs became fee-free after Barclays failed in its bid to charge customers of other banks. Since then, all the banks have pledged to keep their networks free.

However, they have also disposed of unprofitable parts of their ATM networks. HBOS, the owner of the Halifax, sold more than 800 machines to Cardpoint; Abbey has offloaded 50 to Moneybox; and the Co-op has begun to charge customers in remote stores.

The growth in the number of fee-charging machines has been explosive, growing from 13,000 in March to 19,700 now - a rise of more than 40 per cent.

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