Will you have to pay to use cash machines in future?

The era of free cash machines may soon be over, because the banks cannot agree how the UK's network of ATMs ought to be paid for. The members of the LINK network have been in a series of meetings, debating whether the current system should change, and if so, exactly who will bear the brunt of the £900 million cost. So does this spell the end of free cash machines?

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The current system opens up 70,000 cash machines in the UK to everyone. Some 75% of the machines are free to use (the rest are in locations like convenience stores and service stations), and at the moment 97% of all withdrawals are free.

Someone has to pay for all these machines, of course, so at the moment, the cost is split down by transactions, and when a bank's customer uses a rival cash machine, they pay what is known as an interchange fee.

Lloyds has the most current account customers, and as a result pays the biggest fee. It is unhappy with this arrangement, which is why the wheels have come off.

Charges for ATMs?

There have been several meetings this week, and a few options have been suggested. One would be a bulk discount for those who use the network most heavily – so banks like Lloyds will get a discount. There seems to be some disagreement, however, on what sort of discount ought to be available. Alternatively there could be a cut in the fees the banks pay across the board.

This would have to be made up for somehow. It could therefore mean unprofitable ATMs that are rarely used get closed down (or replaced with fee-paying ATMs), to cut the cost of the network.

Alternatively it could see a reintroduction of fees for customers using ATMs of rival banks.

The network has issued a statement, saying that rather than reaching agreement now, it will set up a group of members to explore the options. They will then report back in an effort to find a solution.

This may strike fear into some hearts, because if the network cannot reach any agreement at all then some may break away and start charging for withdrawals at rival banks.

MPs have signalled that if this is the outcome, they will be prepared to take action – although it's unclear what they would do.

What can you do?

On the plus side it will be business as usual for now, so you don't have to worry about paying to get access to your cash in the immediate future.

Further down the road, it could make life more complicated - especially given the fact that bank branch numbers are dropping so fast that thousands of people won't be able to pop into their branch to pick up cash for free.

Customers may therefore be left with the option of withdrawing cash at the Post Office (once the new banking arrangements are in place), using cashback at the supermarket, or biting the bullet and paying to withdraw their own cash from the bank.