A team of authorized officers of the Competition Commission of Pakistan (CCP) today conducted search and inspection of 1-Link (Guarantee) Limited in Karachi, under Section 34 of the Competition Act, 2010, to impound evidences of possible collusion among banks for charging uniform amount for ATM cash withdrawal. CCP took notice of ATM cash withdrawal charges implemented by banks in Pakistan as majority of banks, i.e. 26 banks, were charging uniform amount of Rs.15 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. An enquiry conducted by CCP revealed that in Pakistan ATM cash withdrawal service is provided by two ATM networks/switch namely: 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, 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 3850+ ATMs in 200+ cities nationwide. Card base of its member banks exceeds 8.68 million resulting into monthly Rs. 25 billion (approx.) ATM withdrawal through Rs. 700 million (approx.) 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. More importantly, 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. There was a possibility that Board of Directors comprising of all leading banks in Pakistan took decision as to ATM cash withdrawal services which are implemented by all other its members. The Commission’s stance is that banks can be differentiated in terms of ATMs installed and transactions carried out on their ATMs, therefore, their ATM charges should also vary from each other under competitive conditions. Uniform ATM charges show absence of competition among banks which, prima facie, violates Section 4 (2)(a) of the Competition Act, 2010 in terms of fixing ATM cash withdrawal service charges. Given the facts and scenario that the banks charging uniform ATM charges are members of 1-Link and 11 major banks constitute the Board of directors of 1-Link, 1-Link was possibly playing front role in this collusive activity of fixing ATM charges; hence a search and inspection was necessitated to obtain evidence of any anti competitive practices. Important data has been confiscated by the authorized officials of CCP, which will be scrutinized by the Commission. During the search and inspection, the management of 1-Link extended full cooperation to the Commission's team and provided full access to all the documents and requisitioned by them. The Commission commends positive behavior of I- Link management towards enforcement of Competition Laws in Pakistan .
A team of authorized officers of the Competition Commission of Pakistan (CCP) today conducted search and inspection of 1-Link (Guarantee) Limited in Karachi, under Section 34 of the Competition Act, 2010, to impound evidences of possible collusion among banks for charging uniform amount for ATM cash withdrawal.
CCP took notice of ATM cash withdrawal charges implemented by banks in Pakistan as majority of banks, i.e. 26 banks, were charging uniform amount of Rs.15 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.
An enquiry conducted by CCP revealed that in Pakistan ATM cash withdrawal service is provided by two ATM networks/switch namely: 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, 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 3850+ ATMs in 200+ cities nationwide. Card base of its member banks exceeds 8.68 million resulting into monthly Rs. 25 billion (approx.) ATM withdrawal through Rs. 700 million (approx.) 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. More importantly, 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. There was a possibility that Board of Directors comprising of all leading banks in Pakistan took decision as to ATM cash withdrawal services which are implemented by all other its members.
The Commission’s stance is that banks can be differentiated in terms of ATMs installed and transactions carried out on their ATMs, therefore, their ATM charges should also vary from each other under competitive conditions. Uniform ATM charges show absence of competition among banks which, prima facie, violates Section 4 (2)(a) of the Competition Act, 2010 in terms of fixing ATM cash withdrawal service charges.
Given the facts and scenario that the banks charging uniform ATM charges are members of 1-Link and 11 major banks constitute the Board of directors of 1-Link, 1-Link was possibly playing front role in this collusive activity of fixing ATM charges; hence a search and inspection was necessitated to obtain evidence of any anti competitive practices.
Important data has been confiscated by the authorized officials of CCP, which will be scrutinized by the Commission. During the search and inspection, the management of 1-Link extended full cooperation to the Commission's team and provided full access to all the documents and requisitioned by them. The Commission commends positive behavior of I- Link management towards enforcement of Competition Laws in Pakistan .
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