Examination of Witnesses (Questions 60-79)
MR JOHN
HARDY AND
MR HOWARD
AIKEN
21 DECEMBER 2004
Q60 Chairman: What if somebody came to
you and said "In Speke the operators are charging £10
for each withdrawal"?
Mr Hardy: I do not think they
are charging £10.
Q61 Chairman: No, but what if they said
that to you? What would go through your mind?
Mr Hardy: There is no evidence
that I can see that—
Q62 Chairman: I am just asking you that
question. At £10, what would go through your mind?
Mr Hardy: I think that is obviously
a very high amount.
Q63 Chairman: That is it?
Mr Hardy: Yes.
Mr Aiken: The point is that under
competition law, we are not allowed to determine the amount of
the surcharge. We are forbidden by law.
Q64 Mr Beard: What amount do the charging
companies pay to you when they use your facility?
Mr Hardy: To facilitate the transaction?
Q65 Mr Beard: Yes.
Mr Hardy: We have a thing called
the switching fee, which is paid to us, and on average it is less
than a penny.
Mr Aiken: But the point is, that
is paid by the bank that issues the card. That is not paid by
the independent deployer.
Q66 Mr Beard: So the people who charge
pay you less than a penny?
Mr Hardy: No, they do not pay
us anything. The card issuer pays us less than a penny.
Q67 Mr Beard: But the banks, the free
machines, pay you 31p?
Mr Hardy: No, it is the same fee.
There are two fees to look at, in a sense. There is the interchange
fee, which is paid by the card issuer to the ATM owner, and that
is the 19p or 31p. The card issuer pays LINK something less than
a penny on average to facilitate that transaction.
Q68 Chairman: What is the relationship
between LINK and the banks and building societies and charging
companies, and how independent of your members are you?
Mr Hardy: There are essentially
two parts to LINK. There is the commercial company, if you like,
which sits in the middle and which facilitates the technology
and the finances, and then there is the bit which Howard runs,
which is the card scheme, which is essentially a member-owned
organisation. It is an association, if you like, governed by a
vast body called the Network Members' Council, which I think at
the moment has 53 members on it, and which debates the terms of
trade, if you like, the rules applying between them.
Q69 Chairman: Your website notes that
you have "vast experience and detailed understanding with
regard to the establishment and growth of shared ATM networks
by balancing the needs of consumers, acquirer banks and card issuers."
Mr Hardy: Yes.
Q70 Chairman: How do you take account
of the needs of consumers in your policy development?
Mr Hardy: We seek to encourage
openness and transparency from all of the members, and we have
strict rules about transparency and about notification.
Q71 Chairman: Do you have any consumer
representatives on your board?
Mr Hardy: No, we do not. We do
talk to them.
Q72 Chairman: Do you invite consumer
groups to your members' meetings when you are discussing relevant
issues such as providing clear warning of charges?
Mr Hardy: We have never done that,
but we have spoken to the consumer groups on numerous occasions.
Q73 Chairman: It would not be a bad idea,
would it, if you further engaged with consumers?
Mr Hardy: I have no objection
at all to it.
Q74 Chairman: No objection indicates
that you have no objection, but you are not going to do anything
about it.
Mr Hardy: It does not mean that
at all.
Q75 Chairman: So what do you mean?
Mr Hardy: I mean I am quite happy
for them to come along if they want to come along. Essentially
the Network Members' Council is a member-owned organisation and
if the members are happy to have consumer affairs people coming
along, that is fine by me.
Q76 Chairman: So if a consumer phoned
up and asked when the next members' meeting was and invited himself
along, you would have no problem with that?
Mr Hardy: I think inviting themselves
along is different.
Q77 Mr Plaskitt: Who writes the rules
of the LINK organisation?
Mr Aiken: Essentially it is the
members, the members write the rules, but our rules have been,
and were, submitted to the Office of Fair Trading back in 2000.
They spent 14 months looking at those and gave us an individual
exemption in respect of interchange fees, but what we do in terms
of interchange fees and all our other rules is very closely regulated
by the Office of Fair Trading under competition law.
Q78 Mr Plaskitt: So it is the members
of LINK who write the rules of the organisation?
Mr Aiken: Yes.
Q79 Mr Plaskitt: When decisions are made
within the organisation about those rules or any changes to those
rules, how does that actually happen?
Mr Aiken: That happens by means
of a vote and, depending what the issue is, there are various
majorities that have to be achieved.
| 
