Is this the end of free cashpoints?

Is this the end of free cashpoints?

Popping into a petrol station to withdraw some money at its cash machine? Look out for the creeping introduction of £1.50 fees to gain access to your own money.

Five years ago, virtually all cashpoints in the UK were free and the vast majority of machines operated by mainstream bank and building societies remain so. But a proliferation of new fee-charging "convenience" cashpoints, set up mainly by independent operators, means that customers are nowadays charged at more than one in three machines.

Nationwide building society says that in the first six months of this year, the number of fee-charging machines went up by 40% from around 13,000 to around 18,500. They now cost consumers more than £60m each year and this will escalate, it believes.

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"We think the number of fee-charging machines could overtake the number of free machines by the end of next year or the beginning of 2006," a spokesperson said. Not only are the majority of the new cashpoints installed fee-charging (64% in 2003), but also some financial institutions are selling off free cashpoints to companies who charge.

HBOS (parent group of Halifax) has agreed to sell 816 of its non-branch machines, most of which are in petrol stations, to major charging machine operator Cardpoint. Last year, Abbey sold 50 machines located in Shell garages to Moneybox, another major player.

While both HBOS and Abbey say they are committed to keeping their remaining ATMs networks free - each has a further 2,700 machines - the concern is that other banks may follow suit and sell off ATMs in remote locations, where low usage makes them expensive to operate as a free service.

Another worrying new trend, says Nationwide, is the aggressive approach of the operators seeking to expand their networks by poaching sites where banks or building societies operate free machines. Typically they offer the owner - a corner shop, pub, garage or hospital - financial inducements to replace free cashpoints with ones that charge.

The Royal Bank of Scotland also took an interesting step recently in buying the largest operator of fee-charging cash machines, Hanco.

An RBS spokeswoman says: "These machines, which are primarily owned by the retailer, are meeting a demand driven by the owners of convenience stores, retailers, pubs and clubs and their customers for access to cash in those areas where the level of demand does not justify the considerable investment required in a traditional cash machine."

She insisted the acquisition is totally separate to the cashpoint networks of the group's retail banks (RBS, NatWest, Ulster Bank and Tesco Personal Finance). "We have no plans to change our policy of providing free to use cash machines... for our customers and those of other banks."

Stuart Bernau, Nationwide executive director, says: "Nationwide is concerned that the UK's network of free cash machines is under threat. This is a serious issue for consumers particularly as machines that were free are being replaced with ones that charge, so it is very easy for people to be caught out and face an unexpected fee."

Cashpoint operators agreed that from April this year, all machines that charge a fee would carry a clear warning in the form of a sticker or on-screen message. But not all of them are playing fair.

Some, for example, put warning signs at knee height. Others use stickers which are the same bright colour as the machine, making them hard to spot. In a Nationwide survey, one in four people who had used a charging machine since April said they didn't see any warning before requesting their cash and 97% thought the visibility of warnings should be improved.

There is also concern that fee-charging machines tend to target people who can least afford to pay - the young being particularly vulnerable.

The survey found that more than a quarter of those withdrawing cash from a charging machine took out £20 or less which, with a typical charge of £1.50, means the fee was at least 7.5% of the sum withdrawn.

Nationwide is pushing for a tougher code of practice on this front among members of Link, the UK's cashpoint network, for operators of fee-charging machines.

It's true that, in certain circumstances, any cash machine can be a godsend. Stuck in an out-of-town nightclub late at night, for example, you may welcome the chance to pay £1.50 in order to withdraw your cab fare from a cashpoint in the foyer.

But the worry is that people will use fee-charging machines either because they don't realise they'll be charged or because they don't know there's a free alternative nearby.

How to avoid the charges

To avoid being caught out by unexpected fees, Nationwide offers the following tips:

· Try to use a cash machine that you know doesn't charge

· Check the cashpoint for warning stickers or an on-screen warning message.

· If you see signs saying "free balance inquiries", beware: you are likely to be charged for withdrawals.

· If the machine is going to charge and you don't want to pay, there is likely to be a free cashpoint nearby if you're in a town centre.

· If there is no free cash machine available use your debit card for purchases.

· To find out if your nearest cashpoint charges, visit www.link.co.uk/atm/fr_atm_locator.html

· If a machine tries to charge you, without carrying an up-front warning, report it to Link on 01423 356000 or by email to linkinfo@link.co.uk

Guardian Unlimited © Guardian Newspapers Limited 2004