A reduction in the number of cash machines in a rural area like Huntingdonshire would harm small firms and their customers, a business leader has warned.

There are fears that there could be a cut in the provision of ATMs following a decision by LINK to reduce its cash machine interchange fee – the charges paid to operators by banks per withdrawal.

LINK has previously argued that the cost of running its network is unsustainable at a time when more people are banking online and using contactless card payments.

Malcolm Lyons, leader of the Federation of Small Businesses’ Huntingdonshire and regional branches, said there could be a serious problem if the number of machines was reduced.

“Huntingdonshire is a largely rural location. We need to preserve our ATMs because, for small businesses and the public, they are a necessity,” he said.

“Online banking is a boon for small businesses but people still need cash.”

Mr Lyons said that towns like Huntingdon had sufficient cash machines and could probably stand the loss of some if LINK’s actions led to a reduction in provision, but the result would be felt more seriously in local villages where there was no other access to cash.

The FSB national chairman, Mike Cherry, said: “Access to cash is absolutely vital to local growth in rural and deprived communities. Too often we hear of towns running out of cash because current cash point provision simply isn’t good enough.

“Consumers and small firms have already been hit by thousands of bank branch closures in the last few years. Now, our cash machine network is under threat.”

Mr Cherry said vulnerable communities were not being offered sufficient protection.

“There’s no guarantee that having everyone within a kilometre of a cashpoint will be enough to meet demand,” he said. “Equally, we need to question whether it’s right to make vulnerable ATM users travel a kilometre every time they need cash.

“The Payment Systems Regulator , treasury committee, major rural cash machine providers and Which? have all raised concerns about LINK’s proposals for interchange fee reduction.”

Mr Cherry said: “Following LINK’s private consultation, we now need a full, public consultation where all of those potentially impacted by these changes can have their say. This needs to happen before any changes take place.

“The regulator should halt any further action from LINK and host its own consultation or, alternatively, carry out an urgent market review.”