A swathe of free cash machines could be closed as a result of an ongoing dispute over which company should cover the cost of maintaining the ATM network.

Link, the UK's largest cash machine network, says it wants to reduce the amount it charges card issuers to allow customers to use the machines.

Under proposals published in November, Link would reduce interchange fees paid by card issuers to cash machine operators from about 25p to 20p per withdrawal.

This would happen over a four-year period.

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Up to 1,500 ATMs to close?

But Cardtronics, the UK's biggest independent cash machine operator, said that it was planning to cut back its network of ATMs in response to the plans. The firm runs around 20,000 cash machines in the UK, most of which are in pubs, local shops and garage forecourts.

It says that the proposed move by Link would make free ATMs unsustainable. 

In a statement, Cardtronics said: "We can confirm that there are specific plans to close some of our machines due to the prospect of lower Link interchange payments as early as next year, combined with rising cost pressures which include the recent introduction of polymer notes, the need for software upgrades as well as increasing crime prevention and other compliance costs.

"Should Link's proposals to slash interchange be implemented in their entirety, the free-to-use ATM model in the UK will become unsustainable and Cardtronics UK will be forced to convert a much more significant number of currently viable free-to-use ATMs to pay-to-use or even remove ATM sites altogether."

While the company hasn't given a specific number, it's been reported that up to 1,500 cash points are being targeted for closure.

[Read more: More banks to close branches: will you be affected?]

What happens next?

Cardtronics claims closures will be a particularly big problem in rural areas where ATM operation costs are often higher. Link disagrees, claiming its plans will help retain an extensive network of free cash machines.

There will be fewer machines – but only in areas where there are a large number of them anyway.

A spoksperson for Link said: "Five thousand ATMs have been added to the national network in three years, but 80% are within 300 metres of each other.

MPs have voiced their concerns, especially after numerous bank closures in recent months.

What's more, Which? has written to the Payment Systems Regulator to conduct an urgent review into how customers will be affected by the cuts.

How ‘free’ withdrawals work

There are 70,000 cash machines across the UK, with 30,000 provided by banks and building societies and the rest by independent suppliers.

Each member of the Link network pays a fee that allows its customers to use the other member’s cash machines for free.

So, if you bank with HSBC and use a Barclays cash machine, HSBC will pay Barclays a fee in order to allow their customer to use the ATM.

How the row over fees came about

The fee – which amounts to almost £1 billion a year – is dictated by a fixed formula where the cost of running the network is divided by the number of transactions.

That means financial institutions whose customers use other member’s cash machines a lot pay more.