PSR CP18/2 - Draft specific direction regarding protected ATMs (LINK)

We are proposing to issue a specific direction to LINK Scheme Holdings Ltd (LINK), the operator of the LINK ATM system, in order to make sure LINK does all it can to fulfil the public commitments it made at the beginning of 2018 regarding the ongoing availability of free access to cash for UK consumers.

Here we set out a draft of the specific direction. It is open for consultation until 9 October 2018.

What is the LINK ATM system?

Access to cash, and by implication access to ATMs, is vital for the UK economy. Though consumers’ use of cash as a means of payment is in decline, in 2017 it still was used for 34% of all consumer payments . Around 85% of the cash acquired by individuals is from ATMs.

The LINK ATM system is the main network that connects UK card issuers and providers of ATMs (i.e. cash machines), enabling card holders to obtain cash from their bank accounts. The LINK system is not involved with a cash withdrawal made by a card holder at an ATM belonging to their own bank or building society, but typically is involved if the card holder seeks to withdraw cash at a UK ATM belonging to somebody else.

There are over 100 million LINK enabled cards in circulation. The UK has around 65,000 ATMs and almost all are connected to the LINK system. Around 53,000 of them are free-to-use for consumers, with over 97% of all cash withdrawals by UK consumers being free of charge .

LINK does not provide or operate any ATMs itself, but it sets the rules for providers who want their ATMs to be part of the LINK network, and for card issuers who want their card holders to be able to use the network.

Free-to-use ATMs generate fees for their providers through per-transaction ‘ATM interchange fees’ that are paid by the card issuing banks and building societies. These interchange fees are set by the LINK Board.

Why we intend to issue a specific direction

On 31 January 2018 LINK published its ‘Final Decision and Impact Assessment’ regarding its future plans for the ATM interchange fees. It concluded that there will be modest reductions in the number of free-to-use ATMs as a result of its proposed changes to interchange fees. LINK also said it intended to maintain free access to cash for many years to come through an extensive footprint of ATMs, with the same geographic coverage as in January 2018.

LINK announced a strengthened financial inclusion programme, with the aim of ensuring that free-to-use ATMs are maintained across the UK and that all communities retain free access to cash, including in areas where consumer demand is too low to justify a free-to-use ATM under the normal interchange fee rates. On 12 September 2018, we responded to LINK’s first ‘ATM Footprint Report’, which discussed the availability of ‘Protected ATMs’ . In our response we said we’d ‘develop a specific direction to require LINK to fully develop its policies and processes for applying and implementing its commitments and to report to us on a regular basis’.

We are encouraged that LINK shares the PSR’s views on the importance of free access to cash, and on the need for a long-term sustainable solution set against the continued importance of cash, but declining use of ATMs. However, for the shorter term, we intend to give a specific direction to LINK to make sure it does all that it can to deliver on the commitments it has made regarding free access to cash, including that LINK has suitable arrangements in place to ensure the ongoing availability of Protected ATMs. In doing so we are mindful that the provision of any individual ATM is dependent on a number of factors, which may include the presence of an appropriate economic incentive and the availability of a suitable physical location.

What happens now?

We are interested to receive feedback on our draft specific direction. We also welcome any evidence in support of your views.

What happens next?

Once the consultation has closed, we will review the comments we receive and will, if appropriate, issue any specific direction to LINK Scheme Holdings Ltd.

Please send your comments to or by post (to arrive no later than 9 October 2018) to:

ATM team
Payment Systems Regulator
12 Endeavour Square
E20 1JN

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