Contactless payments are, undoubtedly the future. The UK is increasingly moving towards becoming a cashless society and, while we’re still quite a way off from that day, it seems the impact of contactless payments is already having an effect on society.
According to analysis by Which?, contactless payments are driving force behind the closure of around 300 cash machines each month across the UK. Naturally, it’s those who live in rural communities who are being hit hardest by this sea change in spending culture.
Between November 2017 and April 2018, nearly 1,500 cash machines on the Link network shut down. While not completely down to the rise of contactless, which saw debit cards overtake cash for the first time, it was a big factor in the drop off in small cash transactions that people previously needed to withdraw cash for.
The closure of cash machines tends to happen in areas where other ATMs are within close proximity, and in places where more people are using contactless payments over withdrawing cash. By this logic, you’d have thought rural areas would still be safe from having their ATM shut down. However, to help mitigate costs through dwindling ATM withdrawals, cash machine operators are pushing through changes to cut fees paid by banks for each withdrawal.
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By slashing prices from 25p to 24p, with a goal to reduce it to just 20p in time, many stores operating free-to-use machines in rural areas just won’t be able to keep machines running at a profitable rate.
Which?’s research backs this up, highlighting that ATM closures have ramped up since 2015 with rural areas his especially hard.
Link says that it plans to keep many rural machines in use, despite these findings. The company also highlighted that the UK’s ATM network just wasn’t financially sustainable -– with 80% of machines within 300 metres of another cashpoint, having too many going unused simply makes no financial sense.
“Over the last ten years cash payments have fallen by 33%, during the same period free ATM numbers have grown [to] 18,000 (50%),” a Link spokesperson said to The Guardian. “This disconnect is not sustainable and needs addressing now to protect Link and future access to cash for consumers.”
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What can be done to save the ATM?
As a counterpoint to the closures, Which? and the Federation of Small Business have launched a Save Our Cashpoints campaign. The campaign calls for a review into the situation to fully evaluate the impact cuts will have on communities and people’s abilities to use cash payments.
Stuart Rye, Fujitsu UK’s director of business development for financial services, believes that the ATM is vital in the UK market. “Even as we move towards a cashless society, ATMs still play an important role in the financial life of Brits across the country,” he said. “There is clearly a mandate for a more homogeneous spread of ATMs across all regions, but if closures need to happen, they should be done in a strategic manner that still takes into account ATM supply and consumer demand.”
According to Rye, Fujitsu is working on an AI-led development to optimise cash management and reduce the costs of handling cash – meaning the proposed ATM bank fees shouldn’t need to drop.
“Ultimately, this is a complex issue involving numerous important stakeholders – banks, retailers, consumers, and ATM businesses,” Rye adds. “It’s tough to get it right, and requires a considered approach which takes into account those parties needs now and the trends that will determine their needs in the future.”
It was always clear that moving towards contactless payments and towards a cashless society was going to have an impact upon how often people actually use cash. But did anyone really predict that it was going to be the village communities and remote towns that would be hit hardest by this move?
That’s something to think about the next time you reach for your contactless debit card.
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