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2020 promises to be a banner year for ATMIA as the Next Gen ATM project culminates in what is expected to be the world’s first certified Next Gen ATM – see the Next Gen portal for more information. This year, our annual European industry conference takes place in the major and historic European city of Berlin – check our Events page for updates.
Universal Cash Deposit at UK ATMs - and the move to Smart ATMs!
The UK Government rightly made clear in May 2019 that all denomiations of cash - from 1p coins to £50 banknotes - would remain in circulation. However, for circulation of cash to work in practice, the UK public and businesses need to be able to deposit their cash at any ATM that has a deposit facility, rather that having to find a bank branch or ATM operated by the financial institution with which they have an account.
In these days when the number of bank branches is fast declining, it is unrealistic - and very inconvenient - to expect those wishing to deposit cash to search out one of their own bank's ATMs to do so.
The good news is that the UK LINK Network now has a Universal Cash Deposit transaction available to be used. All that is needed now is for all Issuers to adopt the transaction. After that, any ATM Operator can install smart machines anywhere to accept cash deposits from the customers of any Card Issuer.
I WILL NOT REST UNTIL THIS INNOVATION IS IMPLEMENTED.
However, universal cash deposit at ATMs is only really a first step. What is truly needed is a network of Smart ATMs, strategically located around the UK and, ultimately, providing all of the services available at a staffed bank branch.
2018 cash use statistics indicate that every local community with 2000 adults in residence will need two Smart ATMs. ATMs are electro-mechanical devices which suffer faults and outages, including cash-outs. Two ATMs is therefore the minimum requirememt for any Community with no bank branch, to provide 24/7 local access to financial services.
Smart ATMs will provide many transactions and one of the most important is cash recycling. This is a progression from simply accepting cash deposits. A cash recycling ATM processes deposited notes, removing those that are damaged or dubious and makes available for withdrawal those notes that are fit for recycling to the public.
Cash recycling is convenient for ATM users and is also ultimately a cost-reduction measure. It cuts down the number of cash deliveries needed to ATMs and ensures that communities have some access to cash, even where for any reason a cash delivery fails to happen.
Any local recycling is good for the environment. Cash recycling can therefore be seen as helping the ATM Industry contribute to making our world a better place in which to live.
In some markets, deposited cash recycled within the ATMs accounts for 60% or more of the cash dispensed.
In many countries, all new ATMs which are being installed are capable of cash recycling. We urgently need to see this trend accelerate to include the UK and the whole of Europe.
Further GREAT news back in August 2019 was that the Scottish Affairs Commitee of the UK Parliament came out strongly in favour of cash-deposit ATMs, asking that the UK government faciliate this innovation nationwide.
The Scottish Affairs Committee Press Report can be read using this link
Limitations on Cash Use in the European Union
A study carried out on behalf of the European Commission and finalised in early 2018, has confirmed that restrictions on payments in cash would not significantly prevent terrorism financing, although the same study indicated that such restrictions could be useful in combatting money laundering.
As a result of the finding in relation to terrorism, the Commission has decided not to pursue Europe-wide limitations on cash use at this stage.
You can read more here.
So, good news, but we will need to be alert that this issue may well come up again, given the comment on money laundering. We are in discussion with other interested parties in relation to further potential responses to the Commission.
Also, there has been no indication from the Commission that they will be asking national governments to desist in imposing their own limitatons on cash use. This will need to be discussed with the Commission in due course.
Supporting Payment Choice in the UK
Since 2017, there have been on-going discussions within LINK, the UK's ATM Network, as to the appropriate level of scheme interchange that should apply to cash withdrawals and balance enquiries.
At least one Financial Institution that is a member of LINK was rumoured to want an average 20% reduction of interchange payable, to reduce their own outgoings.
Other members of LINK maintained that there was an established formula for the calculation of interchange and that a 20% reduction in the levels established by using this formula would result in many Free To Use ( non-surcharge) ATMs becoming uneconomic to operate.
Industry estimates were that as many as 8500 free-to-use Independent Deployers ATMs might be deinstalled or switched to pay-to-use in 24 months should interchange be reduced by 20%. This amounts to about 1/3rd of the free Independent Deployers ATMs currently operated on the LINK network. In addition, there may well be many bank operated off-branch ATMs that will become uneconomic and need to be removed.
Removals of ATMs on the scale envisaged would severely damage the publics convenient access to cash and threaten financial inclusion. Almost everyone in the UK could be adversely effected but the impact would be particular keenly felt by those on lower incomes or state benefits, who use cash for almost all purchases and find that use a vital tool in their budgeting to live their lives from day-to-day.
The ATMIA is in discussion with a number of Association Members, the UK Government and Financial Services Regulators. The objective is to ensure that the LINK scheme continues on a basis that guarantees, at a minimum, maintenance of current levels of public access to cash and that the level of LINK interchange is set at levels which make the scheme sustainable on a long-term basis.
Hard work is ongoing to ensure an outcome in the public interest and one that enhances the future role of ATMs and cash in the UK. Ron Delnevo was interviewed by Eddie Mair on BBC radio on 7 April 2017. You can hear this here.
The powerful Treasury Select Committee, the most important Back-Bench Committee of the UK Parliament, has asked for an Independent Inquiry into LINK issiues. Which?, the Association of Convenience Stores,the Federation of Small Businesses and ATMIA have all supported this request.
The good news is that during 2018 LINK decided to limit the definite reduction in interchange to 10%, rather than 20%.This was a vital move by LINK, since industry estimates indicate there were only around 64,000 ATMs in the UK at the end of 2018, down from a high of 70,000.
However, there was further negative news in 2019 that up to 10,000 UK ATMs will be switching from free-to-use to pay-to-use in the next 18 months or so. ATM operators say this has been forced on them by reductions in LINK interchange, which have rendered it uneconomic to operate free-to-use ATMs in many locations around the UK.
To put in perspective, this will reduce the number of free-to-use ATMs in the UK by around 20% and see 300 millon or more ATM cash withdrawals disappear in the next 18 months.
THIS IS A SERIOUS THREAT TO THE FUTURE OF CASH ACCESS IN THE UK and DEMANDS IMMEDIATE GOVERNMENT AND REGULATOR ACTION.
1) LINK INTERCHANGE MUST RETURN TO BEING SET BY USING A COST-BASED TRANSPARENT METHODOLOGY.
2) THERE MUST BE A 10 YEAR GUARANTEE OF LINK MEMBERSHIP FROM ALL CARD ISSUERS, ALLOWING ATM OPERATORS - BANKS & INDEPENDENTS - TO INVEST IN INNOVATION, INCLUDING SMART ATMS.
In late July the PSR released a market research report that basically reported that almost everyone in the UK still uses cash. The PSR now seems convinced of the importance of cash BUT it remains to be seen whether they will implement the measures the ATMIA has recommended.
The Treasury is Chairing a Joint Working Group which includes both the Bank of England and the PSR. That Group hopefully will agree that the measures the ATMIA has recommended should start to be implemented in 2020 and beyond.
The latest Press Release by ATMIA Europe can be read using this link
In October 2019, Barclays reversed their decision to stop their cash accessing cash at Post Offices. A report on this can be read here
Which? the publisher and consumer organiation has firmed up its views since Barclays initial decision
Here's a quote from Which?
“Jenny Ross, Which? Money Editor, said: "This report highlights the fragility of our cash infrastructure in the UK, with no safety net for people affected when a company makes a damaging commercial decision - like Barclays cutting cash withdrawals from the post office network. "Even if Barclays reverses its decision, big questions remain about how we protect the millions of people potentially affected by the double blow of cashpoint and bank branch closures. "It's clear that the industry cannot be relied on to prevent people being stripped of access to cash and vital financial services, so we're calling on the government to urgently intervene with legislation that protects cash for as long as it is needed." “
LINK meantime launched a scheme in October 2019 where communities can apply for an ATM to be installed. There are strict criteria and only £1 Million initially available to fund the ATMs. You can read more here
Dynamic Currency Conversion
Debbie Smyth, representing the ATMIA, met with the European Commission early in June 2018 to discuss Dynamic Currency Conversion (DCC).
The ATMIA team were delighted to report that, whatever happens in relation to transparency, the Commission has decided not to ask for an interim cap on DCC.
The ATMIA will continue to work with the Commission on every aspect of DCC, with the objective of ensuring this service can continue to be offered at ATMs without the imposition of onerous regulations.
ATM DCC is already significantly more transparent than that offered at POS. The ATMIA believes that if the Commission feels it appropriate to review the workings of DCC at all, the review should focus on the POS situation.
As of March 2019, the regulation has been published, with implementation by April 2020. We will continue to work to minimise any negative impact for the industry of the new requirements.
Debbie Smyth met with the European Commission in November 2019 to discuss the implementation of the new regulations. More meetings will be required in 2020.
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