Proposals to cut the fees paid to ATM operators could impact local shops and reduce the number of free ATMs, the Association of Convenience Stores (ACS) has warned.

It was responding to a consultation from cash machine network operator Link, to cut the interchange fee, which is paid by card issuers to ATM operators.

Link is proposing to cut the interchange fee by 20% over the next four years, from 25p to 20p per cash withdrawal.

It says the cut is needed to avoid continuing growth in ATM numbers at a time when there is declining consumer demand for cash for payments.

In the consultation Link says it wants to maintain the geographical spread of ATMs, and says any reduction in the number of ATMs is intended to be in areas where there are currently multiple ATMs very close together.

ACS chief executive James Lowman said: “Consumers want easy access to cash, and this is often provided by ATMs at convenience stores. The majority of local shops offer ATMs, with most of them being free to use.

“The reduction in interchange fees, payable by banks for their customers to use these facilities, would change the economic model for offering ATMs.

“If this leads to some cash machines being removed from local shops, the impact will be felt not just by them, but by other shops, small businesses and markets which benefit from customers having cash to spend.

“Link, and the government, need to think carefully about the wider economic and social consequences of the ATM network shrinking.”

The 2017 Local Shop Report from the ACS shows that 58% of stores in the convenience sector have a cash machine, with 45% of stores providing a free to use cash machine, while 13% have charged cash machines.

Cash also remains an essential method of payment for customers in convenience stores. HIM research featured in the 2017 Local Shop Report shows that 76% of customers pay in cash.