Another month, another form of distribution’s death is predicted. This time it is the turn of the ATM, as some predict that as cash usage goes down, the cashpoint will disappear. Patrick Brusnahan reports
ATMs have had a rough year, and a lot of this is down to interchange. On 1 July 2018, ATM interchange dropped from £0.25 ($0.32) to £0.20. While this may not sound like much, it could lead to multiple ATMs or cash machines shutting down.
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The UK ATM operator has proposed a 5% reduction in the interchange rate from 1 July 2018, which would bring it down to £0.24 from £0.25. This is the first of four annual reductions of 5%; however, each will be subject to further review. This is part of Link’s overall plan to reduce interchange fees from £0.25 to £0.20 over the next four years. The change has been sudden and drastic.
According to Statista, 4,735 ATMs vanished from the UK between July 2017 and June 2018; this averages out to 394 cash machines closing every month. Also, certain areas, such as Edinburgh, Glasgow and Cornwall (see table), have suffered more branch closures than others. As a result, some communities are finding it almost impossible to get cash. Expert Market, a B2B comparison site for card payment systems, has similar insight.
The firm predicts that ATMs will disappear in 19 years, while bank branches will survive for 23. However, Expert Market also thinks this is not disastrous due to the diminishing relevance of cash. While there were 14.3 billion card payments in 2016, this is forecast to rise to 21.9 billion by 2026. In contrast, only 8.7 billion cash payments are predicted for 2026, a sharp 43% drop over 10 years. With regards to ATMs, 3,600 are set to disappear each year until there are none left at all by 2037. By 2041, Expert Market predicts all bank branches will be gone as well.
However, in terms of branches, CI has the count for the end of 2018 to be 7,456, while Expert Market gives the total as 9,279.
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By GlobalDataSpeaking to CI, lead researcher Jared Keleher at Expert Market believes cash’s day might be over. He says: “As our study shows, it’s clear that cash is on its way out. Thousands of ATMs are vanishing from UK high streets every year and businesses that are slow to adapt to the cashless trend risk losing out on valuable customers.
“Millennials are especially keen on the ease of contactless cards, and as their buying power grows, companies must adapt to their demands to stay relevant and profitable.”
