Memorandum submitted by TRM
1. INTRODUCTION
The Treasury Committee of the House of Commons
announced that it will be conducting a short examination of cash
machine charges and has requested a document from TRM setting
out our policy and view on the issues of:
— The principle of charging and factors
underlying the growth in surcharging machines.
— The issue of transparency in charging.
— The issue of whether lack of access
to free machines may cause problems in certain localities.
— Any security implications of the
growth in surcharging machines.
This memorandum both addresses the areas outlined
above and states TRM's policy in terms of surcharging.
2. SURCHARGING
CASH MACHINES—THE
REALITY
Recent press releases have focussed on the 40%
growth rate of surcharging cash machines in the six months to
September 2004 suggesting that surcharging cash machines are displacing
the non-charging cash machine network. However, according to the
LINK network report the number of non-surcharging machines has
in fact increased by 2% in 2004 alone, with the growth in surcharging
cash machines therefore in addition, and not instead of, the existing
ATM network.
Furthermore, even allowing for the increase
in surcharging machines during 2004 the total number of cash withdrawals
undertaken at surcharging machines is still less than 3% of the
overall cash withdrawal market.
Since non-bank independent ATM deployers have
been able to join LINK, companies such as TRM have been deploying
cash machines in many locations where there had previously not
been a machine. These deployments are driven by consumer demand
and simply offer consumers an additional convenient "choice"
of access to cash. The machines typically provide access in areas
that were not previously served and without the convenience fee
would prove economically unviable to sustain.
It is as useful comparison to see that the percentage
of non-surcharging cash machine transactions in the UK—96%
to 97%—is unusually high by international standards. It
is the norm in most countries to be charged for cash machine access
and even more the norm that use of non-bank machines is charged
for.
It should be noted that customers are informed
of the level of surcharge that will be charged at the time of
the transaction and if they so wish, are able to cancel the transaction
at no charge. Consumers are therefore able to make their own choice
as to whether they believe that the added convenience merits payment
of a charge for withdrawing cash.
Although the majority of the TRM cash machine
estate is surcharging, we will have in excess of 200 non-surcharging
cash machines by the end of 2004. Where it is commercially viable
to do so, TRM continue to look for opportunities to grow our non-surcharging
cash machine network and fully expect to maintain a mixed portfolio
of surcharging and non-surcharging cash machines.
1. TRANSPARENCY
OF CHARGES
Approaching the Cash Machine
Under current LINK Rules,
"All surcharging ATMs must display a
sign which is clearly visible to cardholders before a card is
inserted in the machine, (either by notice on the machine or an
upfront onscreen message, at the discretion of the ATM deployer)
saying "This machine may charge you for LINK cash withdrawals"
TRM have fully complied with this requirement
by using a clearly identifiable notice. We are however mindful
of recent comment that this method of notification may not be
sufficient and are now introducing a screen message as part of
an estate wide upgrade programme. The message clearly states that
the end-user may be charged for LINK cash withdrawals and reflects
our belief that our interests are best served through clarity
of convenience charges. We say "may" rather than "will"
as until the cash machine communicates with the host when the
PIN is entered, it does not know what the charge will be. This
upgrade programme will be completed by 31 March 2005.
There has been some suggestion that further
clarity could be provided by also displaying the amount of the
surcharge on the screen before the customer enters their card
or displayed on the marketing materials that are present in the
location, for example "A"-boards or window stickers.
This would be problematical as any changes to
price would require expensive site visits and signage upgrades.
Our view is that in a competitive market it is necessary to have
minimal barriers to price change so that consumer benefits of
reduced prices and innovation can develop. With fixed price display,
competition between cash machine deployers in a particular locality
could not readily result in reduced surcharge amounts, since the
cost of performing those price changes would be prohibitive. Therefore
the impact of such requirements would in practice cause restriction
on the competitive nature of the market.
Another reason why including the surcharge amount
on fixed promotional materials would be detrimental to the end-user
is that unusually in international terms, the authorization request
asks whether the issuer intends to charge or not and this information
is then used to make sure only one retail charge is applied to
a transaction. This sequence of messages was developed by LINK
in order to ensure transparency and make certain that there was
the greatest possible amount of information available to end-users
without unduly restricting the ability of both acquirers and issuers
to develop their own charging policies
In addition, TRM are currently working on the
development of variable surcharging so that the convenience fee
applied is dependent on the amount of cash withdrawn. This would
enable consumers to pay a significantly reduced surcharge for
a withdrawal of £10 than they would pay for a £100 withdrawal.
NOTIFICATION OF
THE AMOUNT
TO BE
CHARGED
LINK requires that all charges, whether applied
by the cash machine owner or the card issuer, should be notified
to the customer by means of an on-screen message at the time of
the transaction and that customers should always have the option
to cancel the transaction without charge.
This amount of charge is clearly displayed on
a single screen at the cash machine and the customer is requested
to accept or decline the charge. If the customer does not select
either option, the machine asks if they want more time. If they
still do not select any option, the machine will automatically
stop the transaction, return their card and will not charge or
dispense cash.
2. FINANCIAL
EXCLUSION AND
LOCATION
The issue of whether lack of access to non-surcharging
machines may cause problems in certain localities is one which
will primarily relate to the financial institutions rather than
independent cash machine deployers. Independent machines provide
an additional network to the non-surcharging bank network and
may well be used by those wishing to avoid transport or other
costs to their nearest non-surcharging machine.
TRM believe that the general principles of competition
and consumer choice should apply to the cash machine network as
part of the normal balance of services provided by banks and ultimately
consumer behaviour will drive the availability of the bank network.
If a customer decides that they are not receiving an appropriate
level of service because their bank has too few non-surcharging
cash machines or branches available, then they will move over
to a different provider. One bank's recent media campaigns have
focussed on advertising the fact that they are not closing down
branches like some of their competitors because this is seen as
a key area of customer satisfaction.
In this way, TRM do not see a major threat to
the non-surcharging network; each business will aim to satisfy
its customers' needs and prevent them from moving to a competitor.
Customers retain the power in the relationship.
TRM is in the cash machine deployment business
and therefore we do not have the opportunity to subsidise or support
our cash machine estate from profits elsewhere. To provide customers
with additional access to machines, the deployment of our estate
must be cost-effective and deliver a reasonable rate of return
to shareholders.
3. SECURITY OF
CASH MACHINES
The Treasury Committee press notice indicated
that it would seek evidence on whether recent trends in the provision
of machines had any security implications.
The deployment of cash machines by Independent
Deployers such as TRM has benefited the security of the industry
as a whole with some of the initiatives which have resulted from
the fresh input.
TRM are a founding member of the ATM Security
Working Group (ATMSWG). This group includes the Association of
British Insurers, ATMIA, The Metropolitan Police Flying Squad
and other police groups such as The Greater Manchester Police.
The group was formed to consider crime and security
issues relating to stand-alone ATMs. Some of its terms of reference
are as follows:
— Production of "good practice"
guidelines relating to security issues and solutions.
— Creation of a secure database containing
ISO ATM attack information.
— Promotion of national ISO/Police
Liaison.
— Pooling and dissemination of ISO
ATM Information.
— Reviewing developments of legislative
and regulatory bodies and standards produced by other bodies affecting
the ATM industry.
As a result, we have published the "Recommended
Security Guidelines for stand-alone ATMs" and more recently
the "Street-Based ATM Recommended Security Guidelines".
The proactive stance of TRM and many of the
other Independent Cash Machine deployers in working with the police
from an early stage in our deployments has meant that despite
the numerical increase in the amount of cash machines in the UK,
the number of attacks when compared to the overall estate has
significantly reduced in percentage terms year upon year:
| 2001 | —
| 2.7% |
| 2002 | — | 1.6%
|
| 2003 | — | 1.4%
|
| 2004-6 | — | 0.74%
|
| |
|
4. APPENDIX A—CASH
MACHINE SURVEY
INFORMATION
TRM commissioned an independent survey of people who inserted
their card into a TRM cash machine at the following 2 locations
on 24th and 25th November 2004.
Sunstar Food and Wine
153 Fortress Road
London
NW5 2HR
Spar Didcot Parkway Railway Station
Didcot
Oxon
OX11 7RG
Surveys were carried out by:
"Mruk Research" (http://www.mruk.co.uk)
RESULTS
Did you actually withdraw any cash?
Did you realise that the machine might charge you for withdrawing
cash when you put your card in the machine?
Did you notice the machine informing you of the charge it would
make?
| % |
| Yes | 78 |
| No | 0 |
| Already knew of the charge | 22
|
| |
Why did you choose this particular machine?
(Multiple Selections Allowed)
| % |
| Convenient location | 94 |
| I know there is no alternative close by |
19 |
| Emergency | 6 |
| I was in a hurry | 4 |
| I was in here anyway | 4 |
| Going to shop nearby and need money now |
4 |
| It's inside the shop | 2 |
| Forgot to go to bank | 2 |
| |
Do you think this machine . . . .?
| % |
| Provides a very useful service | 43
|
| Provides a useful service | 39
|
| Is some use | 15 |
| Is of little or no use | 2 |
| Don't know | 2 |
| |
How would you feel if this machine were removed?
| % |
| Very inconvenienced | 24 |
| Slightly inconvenienced | 33
|
| It would have little or no effect on me |
43 |
| |
How often do you use this machine?
| % |
| Once a week or more | 33 |
| Once every couple of weeks or so | 15
|
| Less than this | 41 |
| First time today | 11 |
| |
Age groups
| % |
| 16-24 | 28 |
| 25-34 | 37 |
| 35-44 | 20 |
| 45-54 | 9 |
| 55-64 | 4 |
| Refused | 2 |
| |
SEG
| % |
| AB | 31 |
| C1 | 43 |
| C2 | 17 |
| DE | 9 |
6 December 2004
| |
| 
