The European case for proper interchange, surcharging structure

The European case for proper interchange, surcharging structure
Tags: Associations / Conferences, Transaction Processing, Underbanked / Unbanked
August 22, 2011

Although it is the holiday season here in Europe, we are never far away from the real commercial pressures affecting some of the national ATM markets here in Europe.

As most of our industry observers well know, 2010 was a year of disaster for our industry in Poland, with Mastercard implementing a 65 percent reduction in ATM interchange, which Visa replicated a few months later.

The ATM operators responded with shelving planned deployments and upgrades where they could and, of course, the supplier network was hit with a hard thud. It was not just the industry participants feeling this impact, but the Polish consumers outside of the urban areas are now further away than ever from getting 24/7 access to their cash via an ATM.

There are rumblings that a version of this scenario could present itself in Romania in early 2012, another developing European market where there are few ATMs outside of the high-traffic urban areas.

Last month witnessed a reduction in ATM interchange in France where the previous rate had been in force since before the introduction of the euro.

The UK industry observers will keep you in conversation for many hours about the recent announcement by Visa to reduce its UK domestic interchange rates which poses a challenge to the LINK scheme.

And in the past few days we have seen another UK bank cut access to rival ATMs for some account holders, citing that the LINK interchange rate cannot sustain this level of service to these particular accounts, which are currently loss-making for the bank.

We must always bear in mind that the entire ATM industry is dependent on proper interchange and/or a convenience fees structure. This is an industry that provides society’s main distribution channel for cash, a service upon which millions of cardholders/consumers have come to depend.

Therefore, ATMIA Europe is following in the footsteps of ATMIA in the U.S. and has established its European Legal Fund. As the holistic voice for the ATM industry, we need to be able to raise funds from across our industry so that we can bring in legal expertise to provide advice on what course of action may be taken at a national or European level to protect the health of our industry going forward.