Europe

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Commentary by Ron Delnevo, ATMIA Europe.
E: ron@rondelnevo.com
T: +44 7973 210154
 

MEMBER OF THE MONTH 

The European Members of the Month for December 2019 are..... ALL my European Members!

With my background in retailing - I started helping dad in his busy shop from the age of 8 - I quickly understood what great customer service looks like.  Anywhere I have worked, I have always focused on delivering the best service to my customers. It has always given me great personal satisfaction to succeed in doing so, with the best feeling of all experienced when customers have responded by reporting just how pleased they have been with the service delivered.

In the last 6 years, both Debbie Smyth and myself, financial services professionals with over 50 years experience between us, have used all of our experience and expertise to deliver to our members around Europe the service we believe they deserve. It has involved significant personal sacrifices, not least financial, though it has been very rewarding to make genuine progress on at least some of the major issues impacting the industry around Europe. Of course, the ultimate beneficiaries of much of this work will be the hundreds of millions of members of the public in Europe, who depend so much on the services our industry provides.

So to all those in our industry in Europe, so many of whom have expressed their appreciation of the work Debbie and I are doing, I would like to, firstly, express my sincere thanks and, secondly, wish them, their families and all those they care about a wonderful Christmas and a happy & prosperous 2020!

2020 will surely see many changes for us all - and I will be intent on ensuring that the needs of Europe are given the top priority they undoubtedly deserve!

 

          INDUSTRY HIGHLIGHTS

Meeting of the Month? NO MEETINGS SCHEDULED IN DECEMBER.....apart from the one with Santa on the 25th!

A full schedule of meetings for 2020 will be announced shortly, well before you are really ready for it!

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CHANGES IN PAYMENT SCHEME RULES WHICH CAN IMPACT THE ECONOMICS OF ATMs

Below you will find a discussion on changes to LINKs UK interchange rules.

However, it is not just in the UK that the industry faces changes, which often appear arbitrary.

Many markets are impacted.

We are currently investigating, on behalf of Acquiring members, changes in a number of markets, including Ireland.

Some excellent news is that Visa decided, as of June 2019, not to ban direct charges for cross-border cash disbursements at ATMs in Europe.

This means, for example, that a card holder living in Italy - and with a card issued by an Italian bank - can still be charged for a cash disbursement at an ATM in Spain.

The ability to charge in such circumstances is vital to the economics of ATMs and I am very pleased that Visa has understood this and decided not to impose this inappropriate ban.

MORE NEWS ON OTHER ISSUES IN 2020! 

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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. 

However, as of December 2019, no UK card issuer has implemented this vital innovation. Let's hope 2020 sees this situation change.

Ron Delnevo wrote to Hannah Nixon, then CEO of the UK Payment Systems Regulator (PSR) (she left this post in April 2019) on a number of occasions, asking for an urgent update on the adoption of Universal Cash Deposit in the UK and asking what Ms Nixon was doing to facilitate adoption. Ron met with the interim CEO of the PSR in late June 2019 to once again discuss this - and other - issues. At that meeting, Ron emphasised the need for implementation in 2020, before the position for cash deposits in the UK becomes impossible, especially for busy shops and restaurants.

Ron Delnevo and Debbie Smyth met again with the PSR in October 2019.

Ron also met with the UK Treasury in early September 2017 and again in January, June and November 2018 and in July 2019, at which meetings he asked the Treasury to intervene to ensure this vital transaction is implemented as soon as possible on UK ATMs.

Ron Delnevo and Debbie Smyth met again with the Treasury in October 2019, to urge action to legally protect access to cash and the acceptance of cash.

A very worthwhile recommendation to come out of the UK Access to Cash Report, issued in March 2019, is that the Universal Cash Deposit transaction should be implemented by all UK Card Issuers, with LINK creating an interchange to compensate ATM operators who implement the deposit transaction.

The Bank of England reportedly backs this recommendation.

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. 

When will the first truly Smart ATM appear in the UK?

IT NEEDS TO BE VERY SOON -  AND CERTAINLY IN 2020!

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

https://publications.parliament.uk/pa/cm201719/cmselect/cmscotaf/1996/199602.htm

WATCH THIS SPACE FOR MORE NEWS IN 2020!

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Payment Choice in Sweden

Ron Delnevo has been heavily involved in the Nordic Region in recent years, trying to help ensure that both ATMs and cash have a good future

Ron appeared at the Nordic Finance Forum in Stockholm on 9 November 2017. His presentation focused on how SmartATMs can replace lost bank branches.

Ron has also been fully involved in Finland, trying to stop the imposition of Disloyalty Fees on bank customers who choose to use non-bank ATMs.

The good news at the end of January 2018 was that the Finnish Financial Services Regulator ruled out the imposition of Disloyalty Fees. THIS IS A BIG WIN FOR THE PUBLIC, INDEPENDENT ATM OPERATORS - AND CASH!

It means that it will remain economic for new ATMs to be installed to meet the cash needs of the Finnish public and businesses.

Government intervention in Sweden looked unlikely, until very recently. However the following article from Bloomberg, published on 18 February 2018, held out some hope of government action.

“No cash accepted” signs are becoming an increasingly common sight in shops and eateries across Sweden as payments go digital and mobile. But the pace at which cash is vanishing has authorities worried. A broad review of central bank legislation that’s under way is now taking a special look at the situation, with an interim report due as early as this Summer [2018].

 “If this development with cash disappearing happens too fast, it can be difficult to maintain the infrastructure” for handling cash, said Mats Dillen, the head of the parliamentary review. He declined to give more details on the types of proposals that could be included in the report.

Sweden is widely regarded as the most cashless society on the planet. Most of the country’s bank branches have stopped handling cash; many shops, museums and restaurants now only accept plastic or mobile payments. But there’s a downside, since many people, in particular the elderly, don’t have access to the digital society.

Riksbank Governor Stefan Ingves has said Sweden should consider forcing banks to provide cash to customers. In its annual report on Monday, the Riksbank said the question is what role it should play in a future with even fewer cash payments.

“The Riksbank is carefully analyzing this development,” Ingves said. “Overall, I think we are facing structural changes in areas that have previously been stable. This is a development which will affect all the Riksbank’s departments and we will need to make strategic decisions regarding the way forward.”

“One may get into a negative spiral which can threaten the cash infrastructure,” Dillen said. “It’s those types of issues we are looking more closely at.”

Since this article appeared, a Parliamentary Committee has recommended that bank branches be compelled to offer cash services. This is getting some pushback from the Swedish Banking Association - but it looks likely the politicians will have their way, acting in the Public Interest.

DURING OCTOBER 2018, the Riksbank announced it was minded to mandate that all bank branches accept deposits of cash and dispense cash over the counter.

This would be a huge victory for those fighting on behalf of the Swedish public to ensure cash remains a convenient payment choice in Sweden.

But, of course, this can only happen if the Swedish Government actually acts to enforce cash access - both deposit and withdrawal - at all bank branches.

 AS OF DECEMBER 2019, THE GOOD NEWS IS THAT THE GOVERNMENT IS WORKING ON A BILL TO COMPEL ALL BANK BRANCHES TO HANDLE CASH. I am in close touch with the Government officials who are preparing the Bill, which should be put before the Swedish Parliament late Q4 2019 or Q1 2020.

Further good news earlier this year (on August 1st 2018) is that cash in circulation in Sweden increased last year for the first time since 2007! You can read more by using this link

https://qz.com/1679019/swedens-cash-in-circulation-increased-for-the-first-time-since-2007/

WATCH THIS SPACE FOR UPDATES THROUGHOUT  2020!

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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.

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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.

You can read more here, in an article by Ron Delnevo, ATMIA Executive Director Europe.

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.

 AT HIS MEETING WITH THE CEO OF THE PAYMENTS SYSTEMS REGULATOR IN LATE JUNE 2019, RON DELNEVO MADE CLEAR THAT

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

https://www.atmia.com/news/the-atm-industry-association-warmly-welcomes-scottish-affairs-committee-access-to-cash-report-recommendations/9725/

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

Ron Delnevo says the LINK scheme it's not enough.

"It's a nice little initiative - and I applaud it - but it's not going to solve the problem," he told Today.

"We've lost 7,000 or 8,000 free ATMs in the last two years and we're going to lose another 2,000 or 3,000 in the next few months."

He favours cash, saying: "Cash is intimate, its warm, its personal, it's all the things we want life to be."

Ron attended two special meetings called by the Bank of England in November 2019. These meetings discussed options for the future of the wholesale distribution of cash in the UK. Changes made must guarantee the smooth circulation of cash for a decade or more to come.

WATCH THIS SPACE FOR MORE NEWS IN 2020!

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Business Rates on UK ATMs

An appeal to the UK Courts to stop the Valuation Office imposing Business Rates - a property tax - on off-branch ATMs has now been won!

The Court of Appeal found in favour of the ATM industry and its supporters.

Around £300 Million of  business ratepayments are due to be refunded, with the repayments backdated to 2010.

However, ill-advisedly, the Valuation Office Agency has appealed the court ruling.

They certainly should NOT have done so. They were wrong to impose businss rates on ANY ATM in the first place!

We will know by end Q1 2020 whether this wrong-headed appeal succeeds - WATCH THIS SPACE!

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Dynamic Currency Conversion

Debbie Smyth and Ron Delnevo, 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.

Ron Delnevo and 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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