Insight article

Stuck behind a paywall

Free and paid-for ATMs are not spread evenly around the country, with consequences for who is more likely to pay to access cash.
3 min read
Denise LovettEconomist

Key Findings

  • More-deprived urban neighbourhoods and ethnically diverse areas in the UK have a relatively higher proportion of pay-to-use ATMs. 
  • Pay-to-use ATMs have increased by 22% in more-deprived urban areas between March 2018 to March 2020 compared with a 1% reduction in more-deprived rural areas. 
  • Lone parents, younger individuals and renters are more likely to pay to access their cash.

Declining free access to cash

The decline of free-to-use ATMs in the UK has been well reported and our analysis of data from LINK, the UK’s largest cash network, shows that there was a 23% decline in free-to-use ATMs between January 2018 to December 2020.

Some of these free-to-use ATMs have been closed entirely, while others have been converted to pay-to-use machines. In total, 7.5% of ATMs that were free in 2018 now charge, typically between £1 and £2 per transaction. 

Inevitably though, aggregate figures hide that the loss of free-to-use ATMs has not been distributed evenly across local areas and some places have experienced higher conversion rates to pay-to-use.

Where is most impacted?

Previous Which? research found that ATMs were more likely to become pay-to-use in more-deprived areas. Between January 2018 and May 2019 free-to-use ATMs in more-deprived areas were approximately 50% more likely to convert to pay-to-use ATMs than those in affluent areas. 

Our research also indicated that ATMs in rural areas were more likely to be converted to pay-to-use. However, more recent academic research shows that the level of deprivation in a rural or urban place is important as more-deprived urban areas have particularly experienced an increase in pay-to-use ATMs. Between March 2018 and March 2020:

  • More-deprived urban areas lost 21% of their free ATMs, compared to 12% in more-deprived rural areas. 
  • There was a 22% increase in the number of pay-to-use ATMs in more-deprived urban areas, in contrast to a 1% reduction in more-deprived rural areas and a 4% increase in less-deprived urban areas.

The consequence of this is that, as at March 2020, there were 3.7 free-to-use ATMs for every 1 pay-to-use ATM in less-deprived urban areas, compared to just 2.5 in more-deprived urban areas. 

Who is most impacted?

Some groups of consumers are more likely to live in more-deprived areas. This includes people of some minority ethnicities, such as Black African, Black Caribbean, Pakistani and Bangladeshi. Further, it has been shown that ethnically diverse urban neighbourhoods are more likely to have a higher proportion of pay-to-use ATMs and are most likely to have one as their nearest cash point. This suggests that some consumers from a minority ethnic background are more likely to have to pay when accessing cash.

Of course, living in an area with lower levels of free cash access will not necessarily be harmful. For some, the declining cash landscape will have a minimal impact if they use cash infrequently because they are comfortable with and able to use digital payments.

However, cash remains an important means of payment for many. The FCA has found that those on lower incomes, in poor health or digitally excluded are more likely to be reliant on cash, and we know they are also more likely to live in more-deprived areas.

Recent research looking specifically at which groups of consumers are more likely to pay for cash finds that lone parents, those who are renting and those under 35 were more likely to pay to access their cash, and it is important to be aware that these characteristics are not mutually exclusive and may be compounding factors.

Conclusions

The cash landscape is changing at different rates across the country, but since different areas have different demographic and socio-economic compositions then this can mean that some groups are more likely to have to pay to access their cash. 

The increase in pay-to-use ATMs in more-deprived areas, coupled with the fact that those on lower incomes are more likely to be reliant on cash means that recent changes to the cash network are having a regressive effect. It will be important to consider the distributional effects of alternative access solutions.