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MPs have asked the UK’s cash machine network to explain its plan to cut the fees it charges card issuers, which could lead to the closure of thousands of ATMs.

Nicky Morgan, the Conservative MP who chairs the Commons Treasury select committee, asked the Link association of cash machine operators on Wednesday for an estimate of how many ATMs will need to close because of the planned fee reduction.

Some industry groups have warned that as many as 10,000 of the UK’s more than 70,000 cash machines may have to close as a result of Link’s proposal to cut the interchange fee it charges card issuers for each cash withdrawal from 25p to 20p over four years.

“It seems intuitive that a 20 per cent reduction in the interchange fee received by an ATM operator may mean that some machines are no longer economically viable,” Ms Morgan wrote in the letter to Mark Boleat, Link’s chairman.

“How many ATMs do you project will close as a result of the proposals?” Ms Morgan asked, adding that she wanted to hear what plans Link has to monitor ATM closures or the introduction of new cash withdrawal fees for customers to prevent “consumer detriment”.

Link has 37 members, including banks, building societies and independent ATM operators. It recently became a not-for-profit company with a public interest remit, and took charge of the governance of pricing by the ATM network from the industry participants.

Sir Mark said in response to Ms Morgan’s letter: “Link is committed to maintaining an extensive free network of ATMs for consumers for years to come.”

He added that the Link board believes the interchange fee is currently too high and the growth of ATM openings is not sustainable “given the declining use of cash for making payments”.

John Howells, chief executive of Link, said the number of consumer cash payments had fallen from 20bn in 2010 to below 15bn last year, yet more than 5,000 ATMs were created in the same period despite forecasts that use of bank notes will keep falling.

He said eight out of ten free-to-use cash machines were within 300m of each other, adding: “It is understandable that independent ATM operators want to keep expanding but it isn’t necessary and if it keeps growing it just won’t be sustainable.”

Sir Mark added: “We do not envisage any scenario where there will be areas of the UK which will not continue to have free access to their money. Our proposals include a strong financial inclusion programme that will ensure that there is positive impact on financial inclusion.”

Mike Cherry, national chairman of the Federation of Small Businesses, said: “We can’t have any more threats to our already dwindling cash machine network. Cash is still king for thousands of small firms, particularly those in tourist hotspots and rural areas with poor connectivity.”

Gareth Shaw of Which, the consumer group, said: “These proposals could lead to a significant reduction in the number of free-to-use ATMs, leaving consumers without easy access to their cash free of charge. The Treasury committee is right to raise this issue and it now requires closer attention from the Payment Systems Regulator.”

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