Cardpoint unveils plan to charge at 400 cash machines

The cash machine operator Cardpoint, which reported higher-than-expected profits yesterday, has announced plans to turn up to 400 of the ATMs it acquired from HBOS into fee-charging machines.

The cash machine operator Cardpoint, which reported higher-than-expected profits yesterday, has announced plans to turn up to 400 of the ATMs it acquired from HBOS into fee-charging machines.

Five years ago virtually all cash machines in the UK were free, but now 40 per cent of them charge - though they account for only 3 per cent of transactions. Nearly two-thirds of ATMs installed last year were fee-charging, according to Nationwide. It said that if this rate of growth continues, fee-charging machines could soon outnumber the free ones.

ATMs run by banks do not usually charge customers, but the largest operator of charging cash machines, Hanco, has recently been acquired by Royal Bank of Scotland. Meanwhile, HBOS sold 816 cash machines to Cardpoint in June and Abbey sold 50 to Moneybox last year.

Stuart Bernau, the executive director of Nationwide, said: "We are concerned that the UK's network of free cash machines is under threat. This is a serious issue for customers, particularly as machines that were free are being replaced with ones that charge, so it is very easy for people to be caught out and face an unexpected fee."

The cash machine companies defend themselves by saying they provide valuable services to customers in "remote locations", such as garages, where free machines would be too expensive to maintain.

Cardpoint, which operates 2,800 cash machines at petrol stations and retailers, reported pre-tax profits of £1.8m in the year to the end of September, up from £0.1m a year ago. The company has so far made 100 of the HBOS machines charging, and 250 are set to be converted by March. That number could eventually rise to 400, charging £1.50 or £1.75 per withdrawal.

Mark Mills, the chief executive, said that puts Cardpoint on track to hit this year's forecast of £8m in pre-tax profits, or 12p earnings per share.

Good progress was made in Germany where 30 machines are in use, charging about €3.50 (£2.45) per transaction. Mr Mills said the company is considering moving into other countries but will focus on Germany for the moment, as it was "an immature market where we can get good returns".

Concern over the growth in charging cash machines has led the House of Commons' Treasury Select Committee, chaired by John McFall, to launch an inquiry into the issue. The committee has requested submissions from involved parties and will hold its first open hearing on 21 December.