Airport cash machines ‘at risk’ over bid to cut cross-border bank fees

Date: 31/10/01

By Peter Chapman

A regulation meant to cut the cost of transferring money across the eurozone could mean the end of cash machines in airports and resorts, bank-card giant Europay is warning.

The group, which manages the Mastercard, Maestro, Cirrus and Eurocheque systems, claims the law - scheduled for adoption by the end of the year - will remove incentives for banks to offer services targeted mainly at foreign customers.

Christoph Baert, head of regulatory affairs for Europay, said regulators had failed to appreciate what impact the rules would have. "It is rather disturbing that people paid to adopt legislation do it without understanding it. They are wanting a result without looking at the reality - I find it quite shocking."

Use of banks cards had been acknowledged by the European Commission as the cheapest means of getting cash abroad, he added.

Credit card giant Visa said it shared Europay's concerns. Peter Moller Jensen, vice-president of EU relations and regulatory affairs, said: "Visa is concerned because the regulation will not further facilitate 'a single payment area' but rather freeze or reverse the market."

Under the current system, a card-holder's bank pays its foreign counterpart when a customer uses a credit or cash card to withdraw money at a machine. The customer's bank then recoups the fee from the client.

But the law will end this system. Baert believes it is unlikely banks would continue to operate the machines, which can incur huge rental charges - particularly in airports.

His warning comes as the European Bankers Federation unveiled a deal that would involve banks charging each other a fixed 'interchange fee' when cash is transferred between countries. An additional cross-border charge paid by consumers would be phased-out by 2006.

Single market ministers could reach a deal on the rules at their 26 November meeting. MEPs backed the measures earlier this month.

A regulation meant to cut the cost of transferring money across the eurozone could mean the end of cash machines in airports and resorts, bank-card giant Europay is warning.