0
ISLAMABAD: The Competition Commission of Pakistan (CCP) on Thursday conducted search and inspection of 1-Link (Guarantee) Limited in Karachi to impound evidences of possible collusion and/or such practice falling under the purview of prohibited category in terms of Section 4 of the Competition Act, 2010, among banks for charging uniform amount for ATM cash withdrawal.
The CCP took notice of ATM cash withdrawal charges implemented by banks as majority of 26 banks in the country were charging uniform amount of Rs15 for ATM cash withdrawal transaction.
In the absence of any guideline from the State Bank of Pakistan, chargeability of ATM cash withdrawal services in a similar manner raised a suspicion of collusion among banks.
In Pakistan the ATM cash withdrawal service is provided by two ATM networks/ switch 1-Link and Mnet.
The State Bank of Pakistan has mandated that all commercial banks in Pakistan, both foreign and domestic, have to become members of one or the other switch to provide ATM services to their own customers as well as customers of other banks.
1-Link is a consortium of major banks (total 31) and owned by the consortium of 11 major banks that own and operate the largest representative shared financial services network of Pakistan, while Mnet switch has approximately 15 members.
During the enquiry, the SBP informed CCP that the State Bank does not monitor and regulate banks at such micro level but it is discretion of banks to charge customers on ATM cash withdrawal services.
Suspicion of collusion was strengthened by the fact that 31 banks are member of 1-Link which may provide them a forum to discuss and agree on ATM charges. It was revealed that 1-Link is a guarantee limited company incorporated to carry out e-banking services which include shared ATM network, utility bill payments, inter-bank fund transfer. 1-Link provides services on more than 3850 ATMs in around 200 cities nationwide.
Card base of its member banks exceeds 8.68 million resulting into monthly approximately Rs25 billion ATM withdrawal through Rs700 million volume of VISA transactions.
Even though the modality of revenue sharing generated from such huge volume of ATM transactions is not known, however, number of transactions carried out through 1-Link , prime facie, reflects common interests of 1-Link and its member banks to fix ATM charges.
The CCO has observed that personnel from 11 major banks constitute Board of Directors of 1-Link, whereas rest of banks become its members by entering into a membership agreement which establishes the rights and obligations for participation in the network and binds members on 1 Link’s operating rules.
