HSBC rolls out free convenience store ATMs

High street bank HSBC has struck a deal with the Federation of National Retail Newsagents (FNRN) to roll out an unspecified number of free ATMs in convenience stores across the UK, in collaboration with hardware provider VocaLink.

The bank has a total network of 3,500 ATMs in existence in the UK and has pledged to increase this estate by 500 in 2008, with some of these planned for grocery stores, off-licences and newsagents.

silicon.com Financial Services

Get the latest financial services news straight to your inbox. Sign up for the FS newsletter today!

The number of free-standing ATMs that will be deployed is dependent on a number of factors. A spokesman for HSBC said: "We will be looking for sites with enough customer traffic to make it a viable investment and where we won't need planning permission."

Individual deployments are also dependent on whether shopkeepers want to replace a fee-charging ATM - for which they receive a percentage of the revenues - with a free one.

For HSBC, the rollout is a way of reaching customers who aren't near a branch. The HSBC spokesman said: "ATMs are an increasingly critical touchpoint with customers - 98 per cent of cash withdrawals happen through ATMs."

HSBC explained that in order for customers to use other banks' ATMs, the banks charge each other an interchange fee, which generally cancels out all usage charges. Any bank with more ATMs in use than its rivals will get an interchange dividend. There has been a groundswell of hostility towards fee-charging ATMs and the spokesman said retailers should see an increase in customer traffic as a result of switching to a free ATM.

So far, HSBC has deployed 50 ATMs with convenience store operators and replaced four fee-charging units by the end of last year. All removal and installation costs are covered by the bank. HSBC has offered to replace 200 fee-charging ATMs through the FNRN.

The spokesman said: "Typically we will be looking for locations in areas that are not well served by the existing local ATM estate. These will often be less affluent or isolated rural areas of the country."

HSBC customers will not only be able to withdraw cash but also deposit money, pay bills and make use of other day-to-day banking services.