Can 'ATM pools' save cash?

Chris Ratcliffe/Bloomberg

Banks and merchants in the U.K.  for years have struggled with the cost of cash. It's a problem that also exists in other countries such as the U.S., where regulators and local laws often require support for paper bills as more consumers and businesses embrace e-commerce and digital payments.

In an effort to contain costs while following stricter cash protection regulations, the U.K. 's Link ATM network is piloting an ATM model that enables machines to accept deposits from multiple banks. Called pooling, it's a way for banks to extend their reach for cash-related services as their physical footprints decline. 

It's also a potential model to reach businesses and consumers who rely on cash and need to travel long distances to reach a bank or ATM that supports deposits of paper bills.  

"We need to help businesses keep cash in the community," said Edward Saunders, a consultant for Cicero Advisors and Cash Access, a U.K.-based bank-supported nonprofit organization. Cash Access has worked on several cash resilience projects, including the ongoing Link initiative. "A key issue that we have learned in recent years is that while a great deal of the focus on access to cash is centered around the ability to spend cash, what is often overlooked is a business' ability to deposit cash as well." 

Businesses that routinely deposit cash to ATMs need nearby access for convenience and security, Saunders said. "For a store where deposits previously meant walking down the high street, it may now require closing their shop and driving to the next town. There are additional security and insurance risks that mean that some businesses may choose to become card only."

NCR Atleos and ATM company Note Machine are managing the ATMs in partnership with Bank of Scotland, Barclays, Halifax, Lloyds, NatWest, Royal Bank of Scotland and Ulster Bank. The partners in the cash pooling project view the ATM deposit networks as a companion to other measures to maintain access to banking, through centralized banking hubs—Cash Access has opened about three dozen hubs over the past two years, and has also helped to expand access to cash services via postal banking. 

Since LINK is the U.K.'s de facto ATM network, it connects virtually all the U.K. ATMs that provide free cash withdrawals to the vast majority of card holders, according to 

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Anthony Parks, U.K. business leader at NCR Atleos, noting that  more than 200 communities are part of the Link ATM project. NCR Atleos expects more communities will follow over the coming years as banks further streamline their branch estates.

New Financial Conduct Authority rules that are slated to go into effect later this year could also indirectly help NCR Atleos. The FCA will mandate that banks undertake cash assessments when making updates that impact access to cash. Banks will also be required to assess whether additional financial services are needed to in local communities with scarce bank branches or ATMs. And banks will not be allowed  to close cash facilities, including branches, until alternative cash services are identified and available. 

"We expect this will move beyond simple cashing and -out services and NCR offers a broad range of self service solutions able to support a wide range of financial transaction needs," Parks said. 

NCR Atleos was part of NCR's 2023 split into two firms. NCR Atleos concentrates on ATMs and related financial services, while NCR Voyix focuses on digital payments. NCR Atleos has developed what it calls "ATMs-as-a-service," which encompasses managing back office functions, operations, compliance and broader cash machine services. The company's goals include reaching underserved markets, which dovetails with the U.K.'s ATM pooling project. 

ATM pooling is part of a growing trend of combining resources to improve operational efficiency and guarantee equitable access to cash withdrawal services, while reducing costs for participating banks, said Jon Locke, chief financial officer of NCR rival Ingenico, adding that initiatives include Batopin in Belgium, Geldmaat in the Netherlands, Cash Services in France and the U.K.'s Link. 

The U.S. does not have such a project, but independent networks such as Allpoint, MoneyPass and Pulse provide similar services, Locke said. 

While the demise of cash has been predicted for years, it remains an important payment method, said Bob Meara, principal analyst for banking at Celent. 

"What is evident is the persistent erosion of broad based cash utilization at the point of sale, even as the amount of cash in circulation grows globally," Meara said. "The rates of change in consumer payment choice, and cash utilization in particular, vary widely by market."

What many discussions of the cost of cash-handling omit, however, is that a good chunk of the cost of cash acceptance at the merchant level and for processing at a bank level is relatively fixed, Meara said. "Merchants, for example, must maintain tills, stock them and count them at every shift and arrange cash deposits whether cash is a large or small component of point of sale transactions."

The cost of facilitating cash deposits and reconciling those funds to point of sale systems is less a function of the amount of cash collected as much as the cost of cash servicing and/or proximity to a local bank branch. "But, as U.K., branch densities have declined significantly, this too becomes more expensive and time-consuming. That's where the deposit ATM network really shines."