ATM charges can sting all of us, including some of the most vulnerable people in our communities by charging people to withdraw their own money. I myself nearly got stung early one morning at a service station on the M4, narrowly avoiding being charge £2.50 for a £20 withdrawal, fortunately I was awake and cancelled the transaction.
Last August Dr Dai Lloyd, one the Plaid AM for South Wales West loudly called on the then New Labour government to regulate ATM proliferation and charges in order to ensure a fair deal for Welsh communities, particularly for those on low incomes who are hit hardest by these charges.
No joy! Why do I suspect that the Con Dem's will also do little to protect some of the more vulnerable members of our communities. Some of the amounts being charged to use these ATMs are ridiculous, to make matters worse there have been some rapid increases in charges recently.
Some are now charging as much as £2.50 for every withdrawal - for anybody withdrawing £10 that's an extra 25%! This is a cost that many users can ill afford. To make matters worse it would appear that more deprived wards with no free cash withdrawal options are being targeted by these companies, this is disgraceful and unscrupulous behaviour by these ATM companies.
From a standard £1.99 charge, about 60p will go to the owner of the site where the cash-point is, roughly 60p is taken by the firm that owns the machine and another 40p goes to Link. What little is left over - about 39p in this case - pays towards installing and maintaining the cash-point. An industry insider said: "The breakdown is roughly the same for all companies, but the charge differs depending on where the cash machine is.”
Very often people living in these communities that have seen the loss of local branches of banks and do not have the luxury of being able to travel to withdraw cash. Their options have been further limited by effects of the New Labour driven Post Office closure programme which hit all parts of Wales.
Many of our smaller communities, especially (but not just) in the Valley communities have lost their banks and their post offices, leaving people with little choice - so much for market forces. Even in those of our communities that are still lucky enough to still have a post office, the days of withdrawing benefits and pensions directly and over the counter are long gone.
A few more things to think about:
- Fee paying machines introduced in 1999 and some now charge as much as £2.50
- Average fee at the UK's 25,000 charging ATMs now £1.75, initially was around £1 per transaction.
- 96.5 per cent of all withdrawals last year were from free cash machines.
- Over the last 5 years the number of cash machines that charge has increased by more than 18,000. The number of free cash machines has grown by only 8,000.
The CAB has said: "When we looked into it we found there was a disproportionate number of these machines in poorer areas.”
As well as hitting everybody, it is worth remembering that ATM machines that charge for transactions have a much more disproportionate impact on people on low incomes and those claiming benefits which are paid directly into bank accounts.
Richard Bates, of watchdog Consumer Focus, added: "It is shocking that there are more fee-charging cash machines in communities where people are least able to afford them."
What about the Banks?
- In 2008, the Halifax Bank of Scotland (HBOS) group, sold more than 800 of its cash machines to an independent operator. This company is now free to introduce fees on the machines.
- HBOS won't directly benefit if charges are introduced - and it will be able to continue saying its own machines are free - but it made £75m from the sale of the network.
- Abbey has also sold part of its cash-machine network.
- NatWest has even bought one of the fee-charging ATM operators, whose profits will now feed into the banking giant's bottom line.
Since 1995 banks have closed 22% of their branch network, 15% of post office branches have been closed, 5% of building society branches have been closed. Machines which charge now account for over 40% of the 53,000 machines in the LINK network. In 2001 only 7,000 cash machines charged to get money out but by last year that figure had rocketed to 25,000 (July 2009).
It is high time that action is taken to protect our communities, it is wrong that unscrupulous companies should profit most from those who can afford it least. The New Labour Westminster government failed to take any action to regulate the proliferation and charges of these ATMs. Sadly we may have a long wait until the Con Dem's step up to the mark on the subject of ATM charges.
In Wales, there is still time in the next term for the National Assembly's social justice Minister needs to step up and work with local public service providers to provide free alternatives and we must see if there is anything else that can be done to protect our communities from this unfair practice and protect our communities from unfair charges.