Memorandum submitted by Barclays
INTRODUCTION
Barclays welcomes the opportunity to submit
the following evidence to this inquiry.
For the purposes of this document reference
to "ATMs" encompasses Automatic Teller Machines/cash
machines.
We would particularly like to emphasise that:
— Barclays is fully committed to ensuring
that information concerning ATM charges is transparent to consumers.
— Barclays operates the third-largest
non-charging UK ATM network comprising 3,800 machines.
— Barclays is a member of the LINK
ATM network and does not charge its own customers or those of
other banks or building societies for using its machines.
Also, we understand that 97% of cash withdrawn
in the UK in 2003 was from ATMs at which no charge was made.
THE TREND
TOWARDS CHARGING
Barclays was the first bank in the UK to install
an ATM at Enfield branch in 1967. We are committed to our ATM
network and have no plans to sell any of it.
It is, however, increasingly difficult to compete
with the new independent ATM firms when tendering for new non-branch
sites. Prime locations, such as motorway service stations, attract
very high tender prices and we expect this to continue.
Often only the independent operators, who raise
income by charging consumers for using their ATMs, can economically
justify paying these higher prices for prime sites.
It is noticeable that on sites belonging to
organisations such as Network Rail and London Underground non-charging
ATMs are found, whereas other organisations, including the Post
Office, have charging ATMs on their premises.
RECIPROCITY AND
THE LINK NETWORK
Prior to the current LINK arrangements, ATM
transactions in the UK were based on "reciprocity".
Specific groupings of banks and building societies were able to
offer free transactions to non-customers in return for their own
customers being able to use competitors ATMs' free of charge.
The arrangements between LINK members are based
on the LINK scheme rules and interchange fees, which are the fees
paid by a bank/building society card issuer to the owner of the
ATM which has provided a service to the card issuer's customer.
In recent years, however, a number of new members, who are not
necessarily banks/building societies, have entered the ATM market
and have changed the dynamics of the industry.
The new independent ATM operators are typically
"acquirers" only. This means they own ATMs and "acquire"
other card issuers' customer transactions. Some, although not
all, of these acquirers levy a charge on consumers for using their
ATMs for cash withdrawals.
If these acquirers do levy a charge, they will
then receive the interchange fee only for the balance enquiry
element (if one is requested by a customer) and for any rejected
entry fee caused by the customer deciding not to proceed with
the transaction or due to insufficient funds being available.
They also increase the costs of the traditional
ATM card issuers because:
— LINK interchange costs are higher
on remote ATMs (ie ATMs not located at bank branches) than they
are on ATMs at bank branches, by virtue of higher rents, maintenance
and replenishment costs.
— Many of the remote ATMs prompt customers
to ask for a balance enquiry. Each balance enquiry obtained from
a third party ATM has an individual interchange fee paid by the
consumers' bank, irrespective of whether a withdrawal is then
made.
Transparency/Clarity of charges
Barclays is fully committed to ensuring that
information in relation to ATM charges is transparent to consumers.
We clearly explain to consumers that Barclays does not charge
for transactions no matter with whom they bank (See Appendix).
We believe that charging ATMs could be made
more transparent. We would support further changes to the LINK
rules to make notification more transparent. In particular, requiring
"charging" machines to display a mandatory on-screen-warning
message before the card is inserted into the ATM. We feel this
would be more effective than the current rules that allow the
"charging" machine operator to either use a sticker/sign
or an on-screen message to explain that the ATM may charge.
FINANCIAL EXCLUSION
AND LOCATION
Historically, ATMs were located either in branches,
or where there was a high usage, for instance in railway stations.
Therefore, smaller communities such as rural areas and areas where
there was a low penetration of bank account users were unlikely
to have as many ATMs.
In recent years the UK ATM coverage has substantially
increased with research in 2002 indicating 91% of people in the
UK have access to an ATM within one mile of their home.
In areas where ATM coverage is not as widespread,
or where an independent ATM operator levies a charge for withdrawing
cash, there are increasing numbers of ways for consumers to obtain
cash without incurring a charge.
These include Bank and Building Society branch
networks and in addition, the agreement that Barclays and others
have with the Post Office which enables basic bank account customers
and others to obtain cash free of charge over Post Office counters.
Also, increasing numbers of shops, not just the large supermarket
chains, offer free cashback facilities.
Barclays research supports the recently published
figures from LINK and APACS that, although the number of charging
ATMs is growing, the proportion of withdrawals at charging ATMs
is still very small. We estimate that over the last 12 months
only 4.5% of the total cash withdrawals that Barclay's customers
made were from other companies' ATMs that charge.
SECURITY
There is no doubt that ATM fraud has increased
significantly in recent years and particularly in 2004. Barclays
is taking a leading role in reducing ATM fraud.
We are working closely with the police and suppliers
to identify ways of stopping the fraudsters. We have also launched
a media programme to help educate consumers. We have put an on-screen
security notice on our ATMs. The process of recompensing Barclays
customers who are victims of ATM fraud has been streamlined and
made more efficient.
Barclays does not consider that the increasing
number of charging ATMs has contributed to the increase in fraud.
We support LINK's efforts to achieve tighter controls and improved
minimum standards for ATMs in the UK.
3 December 2004
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