DEATHWATCH: cash machines that charge you to get your own money out

lloyds cash pointThe youth of today won’t remember what it was like back when you had to use your own bank’s cashpoint* to get your money out. If you were a Lloyds’ customer, heaven help you if you wanted to use an HSBC cash machine. Or at least, you’d be charged somewhere between £1.50 and £3 for the privilege.

Before long, however, some banks ganged together so you could all use each other’s machines, with rival bank- gangs facing off until it became the free-for-all it is today.

Or at least it’s now mostly free. Now just three in 10 cash machines levy charges, which is the lowest proportion in a decade and is down to people power and increased competition between providers. Back when we were all happy to pay charges, there were loads of fee-paying machines, now we’ll just walk a bit further to find a free one.

What’s interesting, though, is that more than half of the cash machines in Britain are currently owned by independent operators- 34,733 of the total 68,630 machines are now run by businesses other than banks or building societies. You might think that independent machines would be more likely to charge, being as they don’t have a myriad other ways to extract money from you same as your bank. However, the spirit of free competition has come to the rescue, with operators banking on low margin/high volume beating those £3 fees.

How cash machines work for independent operators is that each time someone makes a withdrawal, the operator is paid 25p by the customer's bank. This fixed fee covers the operator's costs, such as employing someone to put money in the machine and paying a "rent" fee to the landowner. If you get enough 25ps, you will be laughing all the way to the bank, which is why operators are positioning new machines in the middle of busy pavements or pedestrian areas.

Graham Mott of Link, the industry body for cash machines, said: "Independent providers have realised that if a rival is charging a few pounds for withdrawals down the road, they can install a free machine and lure customers away."

"Free cash machines are a real asset for shops, too, as customers are more likely to visit and spend in store, so many retailers are requesting that option."

There are now more than 48,000 free cash machines in the UK, up from 32,729 in 2004, according to Link.

James Daley of consumer website said: "People hate paying to get hands on their own money, so this is good news for the consumer. Yes, it's cheaper for banks if you used their own machines and they are always looking for ways to steal a little more from customers. But banks are making such large margins that there would be no excuse to pass on the extra costs of people going to independently-run machines."

* actually, you can’t call them a cashpoint unless you are specifically talking about a Lloyds machine. They own the word. Fortunately cash machine works just as well.


  • David
    Thanks for clarifying how it works. I've always wondered how a minnow bank like Raphaels could make money, given that they seem to have a massive share of railway station ATMs. Free to me or not, I always walk a bit further to find a NatWest or RBS. A lot wrong with the big banks, as we know, but I don't like parasites.
  • People P.
    So James Daley which is Fairer….. 1. customers who use more expensive cashpoints pay the extra cost 2. the extra cost is shared between all the bank customers. Which consumer does your website represent? Banks "are always looking for ways to steal…." really, "steal" ?
  • Blue_Moon_23
    People People, you are so correct. Banks as we know don't steal, they mislead (PPI) or defraud (LIBOR).
  • [email protected]&Money
    I never actually realised that cash machines were operated primarily by an independent retailer. I just testing that individual banks operated their own cash machine services. But I suppose it makes sense to have scale to your operation! I didn't realise that they were paid 25p per transaction either which is interesting. I tried to use a machine at a SPA shop recently and it wanted to charge me £2.80 to draw out £10!!!!!! The worst places for these fee paying machines always seem to be service stations, but why would you pay to draw out money when you can use your debit/credit card to pay for goods and services at a service station!

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