OFT PUBLISHES REPORT WELCOMING LINK’S INNOVATIVE APPROACH TO DEVELOPING NEW PAYMENT MECHANISMS AND ADDRESSING CONSUMER CONCERNS
06 April 2006
The OFT today published a report into LINK’s governance and access arrangements, looking in particular at competition, innovation and efficiency.(1)
The Report contains the conclusions of a Working Group, set up by the OFT-chaired Payment Systems Task Force, and follows several months of evidence gathering and benchmarking against good practice models. (2)
John Hardy, Chief Executive Officer of LINK Interchange Network said “The Report clearly sets out the many areas in which LINK has innovated – amongst other developments, alongside the 24 x 7 x 365 support for the UK’s cash machine network, LINK is providing the central part of a new faster payments service to speed up clearing of UK electronic payments, and is working with partners to develop award-winning mobile payments products.”(3)
Edwin Latter, Director of the LINK ATM Scheme, which sets the rules for those wanting to connect cash machines to the LINK Network said “The OFT, the Treasury and other Task Force participants, endorsed LINK and its Members’ innovative plans to include direct consumer representation in the Scheme’s governance. This will allow consumer representatives to contribute directly to the LINK Scheme’s work to improve transparency of charges at cash machines.”(4)
The LINK ATM Scheme and LINK Company both welcome the OFT-led Working Group’s input to the governance reform process that was already underway in LINK.
The Scheme has been able to draw on the Working Group’s discussions to update its consumer-facing objectives, and welcomes OFT and Treasury support for the new mechanisms the Scheme and its Members are setting up to ensure direct consumer representation in Scheme governance. LINK and the Scheme Members also volunteered to look at commercially-viable ways of increasing the already large number of bank account holders who can make free cash withdrawals over Post Office counters.(5)
The UK banking industry asked LINK, in a joint venture with Voca, to build a new faster electronic payments service that will make it possible for consumers to make electronic payments in real time rather than through the current three-day system. Other innovative LINK products include:
the launch of MobileATM – allowing banks’ customers to access balance enquiries and mini statements, as well as top up mobile pre-pay accounts, via a secure mobile phone application;
Mobile Phone Top Ups at cash machines – LINK unites mobile operator technologies, the cash machine infrastructure and LINK’s real-time switching capability to create choice and convenience for consumers;
PIN change at cash machines;
free cash withdrawals over Post Office counters – currently available to customers of a number of the largest banks and building societies using the LINK network;
Branch sharing - a facility allowing customers of one bank or building society to do banking transactions at the branches of another (customers of Britannia and Yorkshire Building Societies are currently members of this arrangement).
The Treasury Select Committee considered and reported on cash machine charges in March 2005. The Committee concluded that surcharging was a legitimate business model that provided access to cash in places where there would otherwise be no cash machines at all, and helped to sustain small businesses. Any charges had, however, to be fully transparent to consumers. With the support of the LINK Scheme’s member banks and ATM deployers, LINK has made it a condition of connection to the LINK network that clear warnings of charges are given on all cash machines before cards are inserted. At least three warnings are required – firstly on the outside of the machine, secondly on the screen of the machine before the card is inserted and thirdly before the transaction is completed. Any ATM deployer that fails to comply with these rules faces fines and, if machines are not brought into compliance, disconnection from the network.
Notes for editors
LINK Company operates the network that connects cash machines to card issuing banks, building societies and other institutions. The separate non-profit making LINK ATM Scheme sets the rules that those wishing to be part of the network must comply with.
All but a handful of the country’s 57,900 cash machines – both free and charging – are connected to the LINK network. Although around 40% of machines are charging, less than 4% of cash withdrawals are made at charging machines.
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