High Five for £5 only cash machines

With only £1.3 billion worth of £5 notes in circulation in 2009, far fewer than £10 and £20 denominations, the Bank of England has been trying to raise this figure in recent years. One way of doing so has been to increase the number of ATMs that stock five pound notes.

The ATM operator ‘Bank Machine’ has run a successful pilot scheme in London for the last two years which trialled ATMs that only dispense five pound notes. As a result, it announced yesterday it will be installing 21 more machines that offer this service. As Andrew Bailey, chief cashier at the Bank of England, has said, the ATM “is the front line of cash provision to the public" and this has proved one of the most effective ways of increasing note circulation.

Though Bank Machine usually charges for its services, the special five pound note dispensing ATMs are free to use and will be particularly beneficial to consumers in the current climate, where smaller denominations of cash will help people to budget more effectively.

This move may well further increase consumer use of ATMs and it provides those banks that are able to roll out this service with an opportunity to develop brand reputation and strengthen relationships with their customers – for example HSBC was asked by the B of E to run a pilot service of 100 ‘five pound ATMs’ last year. Receiving a fiver at the ATM would be a very welcome surprise for most and possibly help to drive repeat visits to that particular ATM. The question is, will more banks and ATM providers follow suit?

Ian Kerr