ATMs contribute to financial exclusion

15 March 2013, 12:12   By Sam Smith

A NEW study has revealed that low-income earners are more likely to face problems when trying to access their cash.

cash machine
Credit: HBRH/

The Payments Council published two reports this week examining consumer satisfaction as to the accessibility of their money.

The reports aim to highlight areas where the Payments Council can look at ways to find solutions to any existing problems.

Although the research suggests that 81% of consumers say it is very easy to gain access to the money they need, already marginalised sections of society are facing further restrictions.

Unemployed people and those on low incomes living in rural or deprived areas have inadequate access [pdf] new window to ATMs, experiencing difficulties such as:

  • ATMs in poorly-served areas are sometimes out of order or out of cash
  • Some areas have limited access to free ATMs
  • ATMs with limited availability of small denomination notes, particularly £5 notes, which many people find useful
  • Security fears about using ATMs in areas of high crime or antisocial behaviour
  • Large queues for ATMs in poorly-served areas, resulting in lengthy waiting times

Not being able to access cash isn't just inconvenient though, the research found people affected were experiencing real hardship through not being able to access their money, as well as facing embarrassment and humiliation, and significant financial cost due to having to travel to access their money elsewhere.

"It's encouraging that the substantial majority of consumers and businesses are able to get cash easily, but the Payments Council's focus is on those who have reported difficulties - particularly as these customers are often those most dependent on cash to help them manage on a tight budget." said Adrian Kamellard, Payments Council chief executive.

"Using what we've learnt from this research over the next year we'll be looking to identify any practical steps to deliver improvements for them."

Restrictions for low income earners

But the issue of financial exclusion among low income earners is compounded by other restrictive measures.

Some banks have already withdrawn access to ATMs for people holding their basic bank accounts.

Basic bank accounts are there to ensure people on low incomes or those with no or poor credit histories, including undischarged bankrupts, aren't financially excluded from holding a bank account.

Lloyds first restricted access to ATMs for basic bank account holders in 2006, although they did increase access to include banking group partners Halifax and Bank of Scotland as well as the Post Office in November 2011.

But in August 2011, RBS also stopped its basic account holders from using other banks' cash machines as a cost cutting measure. The restriction was also later rolled out to Natwest customers.

Using a bank's debit card in another bank's cash machine costs the debit card provider about 25p.

The Payments Council research revealed people were being affected by these ATM restrictions.

"Well I've got an ATM both sides of my house and I can't use either of them... so that's annoying [...]. I've got to take a long walk or get on a bus [...] just to go and get some money..."

While it's already been revealed that banking has never been free, it's a serious debate that banks ought to help ensure people aren't being excluded from society.

" these times of financial hardship, financial exclusion can mean social exclusion." Lord McFall of Alcuith, the former chairman of the Commons Treasury Select Committee said at the time.

The ATM restrictions were reported to have saved banks about £10 a year for each basic bank account, which adds up to the banks saving themselves around £10 million a year by restricting access to cash for the most vulnerable people.

Counter services for older people

For 80% of the 2,000 people surveyed, cash machines were the preferred means to gain access to their cash, followed by counter services for 8% and debit card cash back for 6%.

Counter services were most popular with older people; 12% of people who use a counter service do so because they get to talk to people in the queue. They also help to remove security fears as well.

But Post Office branches are increasingly endangered, especially in rural areas.

The Government pledged [pdf] new window £1.34 billion for the Post Office to modernise the network and to safeguard its future, but that has not stopped a spate of well publicised closures.

As stipulated by Government criteria, 95% of people in rural areas must be within three miles of their nearest Post Office outlet. But the number of branches has fallen from over 18,000 in 2001, to around 11,500 as of 2010.

The decline is due to a fall in revenue with many services traditionally offered by the Post Office now available online.

But with older people less inclined to use the Internet, the Post Office remains a vital part of the country's retail network.

While most of us have easy access to our money, those on low incomes living in rural or deprived areas as well as older people continue to face restrictions, which will only serve to deepen social and financial exclusion.

Get insider tips and the latest offers in our newsletter

independent comparison

We are independent of all of the products and services we compare.

fair comparison

We order our comparison tables by price or feature and never by referral revenue.

charity donations

We donate at least 5% of our profits to charity, and we aim to be climate positive.