Cash machine network Link has confirmed that it is pushing ahead with plans to reduce the interchange fee for card transactions from 1 July 2018.

The four-year phased reduction in interchange (the fee card issuers pay ATM operators) will begin with a 5% (around 1p) reduction from 1 July 2018. The position will then be reviewed annually.

All ATMs one kilometre or more from the next free ATM will be exempt from any reductions in interchange.

An enhanced subsidy of up to 30p (tripling the current 10p) will also be paid “wherever needed to ensure that free ATMs remain in areas that could not otherwise sustain them,” Link said.

The interchange fee cut, which Link claims will improve the geographical spread of cash machines across the UK, has been slammed by the Association of Convenience Stores (ACS).

The ACS believes that it could damage the UK’s ATM network by leading to a reduction in the number of ATMs.

ACS chief executive James Lowman said: “Banks have been cutting back their own branch networks, and now they are reducing the interchange fees that fund the network of ATMs provided by retailers and private companies in places that banks have abandoned.

“We are concerned that this will lead to a reduction in the number of ATMs, and their reach and accessibility for all types of communities.

“We are not convinced that the measures to support isolated ATMs go far enough, and we will be monitoring closely the impact of the reduction in interchange fees on cash machines hosted by our members.”

Link claims that the current incentives are driving ATM deployers to focus on city centres, with 80% of free-to-use ATMs now within 300 metres of another free-to-use machine.

John Howells, chief executive of Link said: “Link is committed to protecting free access to cash. The UK has a near record number of ATMs, yet the recent growth has led to the majority of these being placed in busy areas where there simply is no need for a new ATM.

“The combination of a reduction of the interchange, with the significant strengthening of the Financial Inclusion Programme, will begin to rebalance the network, making sure we protect and install new ATMs in locations that really need them.”

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

Cash remains an essential method of payment for customers in convenience stores, with HIM research showing that 76% of customers pay in cash.