Nationwide building society's campaign against fee-charging cash machines drew blood yesterday when ATM operator Scott Tod issued a profits warning.

In a trading update the company said its second-half results were likely to be "substantially below market expectations" - and laid some of the blame at Nationwide's door. The building society has been spearheading a campaign against ATM charges that became front page news last year when MPs and consumer groups said Britain's network of free-to-use cash machines could be in danger of disappearing.

While Scott Tod experienced a slower than expected growth in transactions, Nationwide rubbed salt in the firm's wounds by reporting a record month for ATM use in December.

Scott Tod's shares fell 26% to 38p. The Aim-listed firm is one of the biggest independent ATM operators with more than 2,400 machines located mainly in pubs and clubs that typically charge £1.50 a withdrawal. It expects to have more than 3,000 ATMs by the end of June.

Nicholas Tod, the chief executive, said cash machine use in the crucial pre-Christmas period was below expectations. He said the sector had attracted "an awful lot of bad press", and when he looked into it, the dips in transactions coincided with campaigning by Nationwide and coverage of a Commons treasury select committee hearing on December 21.

At the hearing, MPs said it was those who could least afford to pay fees who were being squeezed hardest by the rapid increase in machines that charge.

Five years ago, virtually all cash machines in Britain were free to use, but latest figures show that about 20,000 of the 54,000 ATMs charge a fee.

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