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Consumers letting their hair down could explain ATM volume spike

24 February 2016

Consumers letting their hair down could explain ATM volume spike

Andrew Neeson,
Market Intelligence Manager,

Whether it is splurging on dinners out or partying the night away, unexpected data from LINK has shown that UK consumers lived it up in 2015, with a 0.8 percent increase in cash withdrawals. This number is even more surprising when it is set against the sharp decline in cash usage over the preceding years.


Source: PaymentsUK, Internal calculations;
Note: LINK volumes are actuals for 2015, however, total Cash and ATM cash withdrawals for 2015 are estimated by Payments UK

Part of the reason behind the LINK volume growth is the continued fragmentations of UK banking, such as the Lloyds TSB split in 2014, and growth in the number of independent ATMs. A LINK transaction occurs when you use a card from one bank in an ATM belonging to either another bank or a third party. Hence, fragmentation in the market is good for us and helps explain our growth in volumes in contrast to cash trends. But this can’t explain what happened in 2015.

With no significant changes to UK banking last year and continued downward pressure on cash usage – we were bracing ourselves for the first decline in LINK volumes since the service was introduced back in 1986. Indeed, during the first 11 months of 2015 this prediction looked to be panning out. Then all of a sudden there was a spike in December ensuring overall positive growth for the year. This was a surprise to our forecasters because it was the first time ever that LINK has recorded a monthly transaction volume higher in December compared to the preceding November.

You can often account for December spikes in the payment systems as a result of holiday cheer. But with ATM transactions it is a little more difficult as, unlike card payments, they are not as heavily affected by Christmas shopping trends.

A possible explanation is a sharp rise in people going out over Christmas. Arguments to support this theory can be found in Visa’s Consumer Spending Index which notes that Hotel, Restaurants and Bars (8.1 percent) and Recreation and Culture (4.8 percent) are among the highest growing merchant categories in December 2015 compared to 2014.

We spoke to Toby Clark, Director of Research at market research firm Mintel:

“Your theory about people spending more on going out really ties in with some of the trends we are seeing. While retail wasn’t a complete write off in December, it was by no means spectacular and was lower than we were expecting. Our research shows that over the last four or five years, leisure spend is one of the key areas that consumers have cut back on. However, this has created a lot of pent up demand. As the economy has started to show improvements, people have begun to indulge a little more. There has been a shift from spending on stuff to spending on going out. Crucially this is also one of the few remaining cash driven sectors”.

December 2015 was also the warmest and wettest on record. Could this seasonally uncommon weather also help explain a surge in ATM usage? Clearly warm weather means people do not have to brave the cold in order to go out. But conversely, wet weather is likely to have the opposite effect and dampen the urge to step outside. What we do know is certain retail categories, particularly fashion, have really suffered this winter. Demand for big warm winter coats is low. So if consumers reduce spending on clothing, could that mean they would have more disposable income to finance a night out? 

The latest consumer research from Mintel suggests this could be the case: Trends on what extra money is spent on


Dining out and going out are two of the top three areas consumers look to spend any extra money they have.

If consumers were able to save money this year due to the clement weather, this would certainly help explain the growth in ATM usage as we opted to make use of a little extra cash in our bank accounts to participate in some self-indulgence. 

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