Some financial firms using network want to reduce fees they pay to allow charge-free withdrawals from most of 70,000 ATMs

Thousands of Link cash machines could start charging for withdrawals as a result of a row about fees among members of the ATM network.

The dispute centres on a move by some of the financial firms which use the Link network to reduce the fees they pay to allow their customers to withdraw cash from most of Link’s 70,000 cash machines across the UK.

About 40,000 of these are provided by independent suppliers to the network, the rest by banks and building societies. More than 97% of transactions through Link machines do not levy a charge for customers withdrawals. The fee paid by card issuers is based on fixed formula.

The 30 or so members of the network are to debate proposals at a meeting next week. The proposals suggest a cut in the fee which is paid by card issuers to Link members. The interchange fees total about £900m a year.

It could lead to the first major overhaul of the network since 2000 when cash machines provided by banks and building societies become free to use. Previously, the system had operated with separate machine-sharing arrangements between groups of banks rather than offering free access industry-wide.

If an agreement cannot be reached, it is possible that some Link members could break away and start charging.

Even if the cut in the interchange fee is agreed, it is possible that unprofitable machines – such as those rarely used – could be allowed to impose a charge for the first time.

A spokesperson for Link confirmed changes were under discussion, saying: “Link is reviewing its commercial model to ensure that it remains the ATM network of choice for as many card issuers and ATM providers as possible.

“At present, all UK ATM and all major card issuers are connected to Link … We operate in a competitive market and there are other ATM networks in the UK available for card issuers and ATM operators if our commercial offer becomes unattractive. We are determined to avoid this situation,.”

Other ATM networks are provided by Visa and Mastercard, but these are mainly used for overseas transactions.

The fee is currently calculated by dividing the cost of running the free-to-use network by the number of transactions. This means the costs rise for those banks whose customers are heavy users of rivals’ cash machines. About 25% of the machines currently charge for withdrawals because they are operated by independent suppliers installed in locations such as convenience stores.

Lloyds Banking Group – which is the biggest user of the network as it has the largest number of current account customers – has previously raised the need for a review of the system, which could result in many cash machines being removed to cut costs.

The meeting is being held at a time of increased scrutiny of the sector by regulators, including the new Payment Systems Regulator. The Competition and Markets Authority has described the Link network as providing an “essential service for millions of customers”.