market
The number of ATMs in the UK will reach about 65,00 this year, up
from 60,428 at the end of 2006 and about 25,000 in 1998. Does this
indicate an over-supplied market? Not at all, believes Graham Mott,
head of scheme planning and development at Link Interchange
Network, the inter-bank ATM transaction switching unit of UK
payments processor VocaLink. “We are seeing steady growth; I feel
there’s room for 75,000 to 80,000 ATMs in the UK,” Mott told EPI.
VocaLink’s platform links the entire UK ATM network, which is the
world’s busiest.
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Other players in the UK ATM industry believe there is
potential for the country to support even larger numbers of
machines than Mott’s target of up to 80,000. For example, Ron
Delnevo, MD of independent UK ATM operator Bank Machine believes
there is a need for 100,000 machines.
At 80,000, the ATM density in the UK would increase from about
1,000 ATMs per 1 million people at present to about 1,315 per 1
million. This would equal the current ATM density in the US
(396,000 ATMs and 301 million people) but still be lower than the
1,434 ATMs per 1 million in Spain (58,000 ATMs and 40.45 million
people) and 1,600 per 1 million in Canada (53,400 ATMs and 33.4
million people). Spain has the highest ATM density in the EU while,
according to UK payments processing industry body APACS, the UK has
the highest number of ATM transactions in the EU. There were 2.8
billion UK ATM cash transactions in 2006, worth a total of £170
billion ($340 billion).
Of note, said Mott, is that growth in the ATM population is at
present being driven primarily by the installation of free-to-use
ATMs by banks and building societies. He added that this is
different from recent years when the number of free-to-use ATMs
held almost steady and growth was driven by independent operators
installing pay-to-use ATMs in facilities such as restaurants and
hotels.
“There was something of a land-grab by independent operators,”
commented Mott.
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By GlobalDataThis caused the number of pay-to-use ATMs to increase to about
one-third of the UK’s ATM population, according to VocaLink.
However, free-to-use ATMs accounted for 96 percent of all cash
withdrawals in 2006.
Financial institutions and independent operators are now both
driving free-to-use ATM growth, continued Mott. One factor has been
the banking industry’s initiative to install 600 ATMs in low-income
residential areas by the end of 2007. Another reason, he added, is
that independent operators are also realising that there is profit
in free-to-use ATMs using a model whereby merchants replenish
cash.
Mott believes the demise of cash is a long way off. Although the
recent advent of contactless payments in the UK could affect cash
use, he observed that “it is still early days; a key factor will be
the level of acceptance by merchants of contactless
payments”.
There is another obstacle to overcome. “Cash is still very
convenient,” said Mott. “It’s also more than just about spending.”
Some people like to budget by managing cash on hand while others
feel more comfortable having cash in their wallets, he
explained.
These factors appear to secure the future of the ATM for many years
to come. Notably, APACS predicts that 81 percent of a total of £270
billion cash acquisition in 2016 will be sourced from ATMs. This
would put ATM cash withdrawals in 2016 at 22 percent above the 2006
level.
