LINK announces new corporate structure
- LINK owners and members agree new corporate structure to encourage innovation and competition in UK payments industry
3 October 2006: LINK announces a new corporate structure, separating its ATM Scheme,(1) which governs the UK cash machine network, from the LINK infrastructure company,(2) a commercial organisation which provides switching and network services that connect members of the ATM Scheme.
The new structure follows a unanimous decision by LINK’s members and owners, including all the UK’s major retail banks and building societies,(3) to reform LINK’s corporate structure to enhance innovation and facilitate competition in the UK payments industry.
LINK’s plans were endorsed in an OFT-chaired Working Group earlier this year and the reforms deliver on recommendations made by the OFT Payment Systems Task Force (PST).(4) These include:
- the separation of the LINK ATM Scheme from the infrastructure company, allowing the Scheme to prioritise Member and self-regulatory issues, whilst the infrastructure company focuses on commercial operations and technological innovation;
- the introduction of a smaller, more streamlined board for the company, including more independent directors in addition to shareholder directors appointed by the banks and building societies that own LINK;
- a more open ownership structure.
Over the past decade LINK’s activities have diversified to include:
- the provision through mobile phones of banking services;(5)
- mobile phone top-ups at cash machines;(6)
- providing solutions for payments processing, ATM acquiring and card issuing through its outsourcing division, Avantra;(7)
- enabling free-of-charge cash withdrawals over Post Office counters(8); and
- “branch-sharing” between financial institutions.(9)
In November 2005, LINK, working with Voca, also won the contract to provide the core part of a new “faster payments” service that will allow consumers to make bank payments in real time, rather than through the current 3-day clearing process. Development is well underway to meet the November 2007 implementation date.
John Hardy, Chief Executive Officer, LINK Interchange Network Limited, commented: “I am delighted that LINK’s members and owners have unanimously agreed these latest reforms that will further encourage innovation, and underline LINK’s position as a key strategic asset for the UK banking industry.”
Edwin Latter, Director of the LINK ATM Scheme, said, “The OFT and Treasury endorsed LINK’s innovative plans for the Scheme’s governance, including mechanisms for consumer views to be included in the decision-making process. This is already allowing consumer representatives to contribute directly to the LINK Scheme’s work to improve transparency of charges at cash machines.”
NOTES
1. The LINK ATM Scheme enables cardholders to withdraw cash and obtain balance information from all but a handful of the 59,000 ATMs in the United Kingdom.
2. LINK Interchange Network Limited, a for-profit company, provides the switching and network services that connect Members of the ATM Scheme, as well as a range of other services.
3. The LINK Scheme has 49 members, while the infrastructure company has 22 owners (all of whom are currently also members of the Scheme).
4. The full report and recommendations of the OFT Payment Systems Task Force LINK Access and Governance Working Group, published in April 2006, may be found on the OFT’s website (http://www.oft.gov.uk/).
5. The services use innovative mobile technology to deliver on-screen balance enquiries, mini statements and prepay mobile phone tops. They are provided through MONILINK, LINK’s joint venture with Morse plc. MONILINK was commended by the World Economic Forum at Davos in January 2006 for its pioneering use of technology. (http://www.monilink.co.uk/monilinkinfo/)
6. LINK's switching infrastructure has been leveraged to establish a Mobile Phone Top Up top up facility via cash machines for pre-pay mobile phone accounts. All major mobile operators and the bulk of cash machine operators participate in this service.
7. Avantra is a trading division of LINK and builds upon the trusted LINK infrastructure to deliver innovative payments and processing solutions for financial institutions, retail and public sectors. (http://www.avantraltd.com/)
8. Free-of-charge cash withdrawals over Post Office counters are currently available to customers of Alliance and Leicester, Bank of Ireland, Barclays, Co-operative Bank, Lloyds TSB, National Savings and Investments, Nationwide Building Society, Clydesdale, cahoot, First Direct and Smile. In addition all the major banks offer a Basic Bank Account that includes this service.
9. This allows customers of one bank or building society to do banking transactions at the branches of another. Britannia and Yorkshire Building Societies currently provide this service.