Overview

LINK is an open Scheme in which membership is open to any organisation that meets the published legal, regulatory and security criteria. Membership can either be as a Card Issuer or as an ATM deployer (an 'Acquirer') or both.

The benefits of membership of the LINK ATM network have long been recognised by most of the UK's largest financial institutions and Independent ATM Deployers (IADs).

LINK network membership provides organisations with the ability to:-

• the opportunity to generate income streams by supplying cash machine services to customers of other institutions and earning interchange fees on transactions.

Key Structural Factors

The LINK network developed from being the smallest of three cash machine networks to its position now as the only ATM sharing network in the UK. A number of structural factors were key in achieving this:-

• LINK has implemented a governance structure that gives member banks the degree of control that is commensurate with their use of the system without allowing any single member or group of members to be dominant.

• LINK has devised and implemented a unique structure (which balances the needs of acquirer banks and card issuers) for calculation of the interchange fee (the fee that the card-issuing bank pays the ATM owning bank for providing service to their customer) which ensures that it is set at an appropriate level and reviewed regularly.

• LINK has a stable, highly experienced and assertive management team.

The LINK ATM Scheme Operating Rules and procedures define the terms of trade between the Members, whilst detailed Operational Procedures assist in the day to day running of the Network.

The LINK network Members together constitute the Network Members Council (NMC). The NMC (based on recommendations from the User Group) sets the Rules and Regulations that apply to the ATM Scheme and annually approves them thereafter, including the Operating Rules and any other rules governing access to the ATM Scheme.

Regulation

Since cash is the most widely used of all the different payment methods available to UK businesses and customers, LINK's market position as the UK's cash machine network means that particular care and consideration must be given to current government legislation.

The LINK network has always co-operated fully with the regulatory bodies and following the publication of the Cruickshank review of Banking Services ("Co-operation in UK Banking", HM Treasury, March 2000), a number of changes were made to LINK's operating rules which were submitted to the Office of Fair Trading (OFT).

The LINK network sets the level of its multilateral interchange fees centrally and commissions an annual independent study into the level at which these fees (the 'wholesale' fees which must be paid by a card-issuing institution to the owner of the ATM which provides services to the card holder) should be set. The studies ensure that the interchange fee is, and continues to be, a true reflection of Members' costs; however, under EU Competition Law, centrally-set fees are held to be anti-competitive.

Following a detailed investigation by the OFT, the LINK network was granted an Individual Exemption under the Competition Act to continue setting fees centrally on the grounds that the fees are genuinely cost-based, and that this is in the interests of the consumer - therefore outweighing any potential anti-competitive effects. This decision followed a public consultation announced on 30 July 2001 to which no substantive responses were made.

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