If you’re an SME owner, have you ever given any thought as to how close the nearest cashpoint to your business premises might be – and how far away it might be in the future? Ahead of a proposed cut in ATM funding from July, the Federation of Small Businesses (FSB) has been polling small businesses about the proximity of their nearest cashpoint, and the results are concerning.
ATMs and their impact on revenue and customer retention
Last month, the FSB polled 397 small businesses, including 70 retailers. The data they gathered is being considered in a parliamentary debate on the issue of access to cash.
The survey indicated that half of small firms are already more than one kilometre away from their nearest free-to-use cashpoint, while one in seven (15%) small firms said they are at least five kilometres from their nearest free-to-use ATM. Meanwhile, research from Which? indicates that the nearest cashpoint for one in five (20%) consumers is already more than 30 minutes away or too far to reach on foot.
Although just over half (51%) of the small businesses with a view on free-to-use ATMs said cashpoints are important to their business. Among retailers, this figure rose to 59%.
53% of retailers with an opinion on the issue said that losing access to their nearest free-to-use cash machine would hurt revenues, while 31% said they believed it would impact on their ability to retain customers.
Which? Money Expert Gareth Shaw said: “It’s clear that a reduction in free-to-use ATMs would hit consumers and businesses across the country hard, leaving communities struggling to access the cash they need.
“We are concerned that LINK cannot guarantee that thousands of machines vital to peoples’ daily lives won’t be closed. The regulator must conduct an urgent review to ensure that consumers – and businesses – aren’t stripped of access to cash.”
The Plan to Reduce Free-to-use ATMs
From 1 July, LINK is set to cut the interchange fee paid by card providers to ATM operators. LINK has stated that it will continue its Financial Inclusion Programme, meaning the drop in interchange fee won’t apply to free-to-use ATMs that are one kilometre or more from the next free-to-use cashpoint.
FSB and Which? have launched the #SaveOurCashpoints campaign, calling on the Payment Systems Regulator (PSR) to pause LINK’s plans while it conducts a full market review.
FSB National Chairman Mike Cherry said: “Access to cash is vital to local high streets all over the country. Many small firms are already miles from their nearest free-to-use cash point. At a time when access to cash has already been restricted by thousands of bank branch closures in recent years, LINK’s proposals are set to make a bad situation worse.”
He was also critical of LINK’s promise to improve its Financial Inclusion Programme.
“Quite how it can achieve its, to date, elusive target of bringing everyone within a kilometre of a free-to-use ATM with less funding is a mystery.
“There’s also the issue of cash machine provision in towns where one ATM isn’t enough to meet demand. We already hear stories of towns running out of cash at busy times. The one-kilometre commitment is hollow when you really start to look at it.”
While many small firms now see the vast majority of their transactions take place by card and may not notice any difference in trade, some small businesses still rely on cash transactions, particularly if they run stalls at fairs and events and don’t have access to mobile payment systems.
There’s also the question of whether people are more likely to visit businesses nearer to a cashpoint because they’re there to use the ATM anyway and it’s convenient to use shops nearby. It remains to be seen what effect the reduction in free-to-use ATMs will have on businesses further away from banks, high streets and shopping centres.
Would a significant reduction in free-to-use ATMs affect your trade? Do cash transactions make up a significant part of your revenue – and how far away is your nearest free-to-use ATM? Comment below and let us know.