Dynamic Currency Conversion: Does The European Union Realise It Is Vital To The Economics of ATMs?

You may be aware that there are on going  discussions in Brussels about Dynamic Currency Conversion (DCC).

If you don’t know what that is, I suggest you do not read more, for fear of being dreadfully bored!

Anyway, moving on, in early 2018, the Economic and Financial Committee of the European Union decided that it wanted to see more transparency in relation to DCC offers, on ATMs and at Point of Sale.

The Committee seemed unaware that there is already good transparency in relation to DCC offered at ATMs, whereas there is often almost none at Point of Sale. In any event, they produced a draft amendment to an existing European Union regulation, setting out additional transparency needs, as the Committee saw them.

I won’t go through the whole process that this draft has gone through during 2018. Suffice it to say that it has moved from the Committee to the Council, then to the Commission and on to the European Parliament.

The draft is now at what is called the trilogue stage, during which the Parliament, Commission and Council meet to negotiate what the final version is going to look like.

I have personally been involved in meetings with Committee representatives and the Commission, as well as submitting detailed input to the Rapporteur, who is responsible for guiding the draft through to its enactment.

What is very disappointing to me is that I have been at pains to point out  to anyone who will listen in Brussels as to the significance of DCC as a revenue stream. This particularly so for the Independent ATM Deployers (IADs), who are often installing ATMs to replace those removed by banks.

DCC transactions are more often than not only a small percentage of total transactions carried out by the public at ATMs. The majority of cash withdrawals, for example, are usually non-DCC domestic. These are often uneconomic for IADs because of downward manipulation of ATM interchange rates, which is now trending around Europe.

Put simply, without the revenue from DCC, a growing number of ATMs would be uneconomic to operate. The removal of such machines would mean the loss of access to domestic transactions at those ATMs, which may account for 80% or more of the total cash withdrawals. 

So there are complex issues involved and, at their heart, is the vital need to safeguard access to cash and other financial services - AKA Financial Inclusion -  for every European citizen.In a Europe where  bank branches are disappearing and bank ATMs are also being removed, the role of the IAD’s much be both appreciated AND nurtured.

As I have already noted, I have explained all of this to everyone in Brussels, yet they continue down a path looking at DCC in isolation, apparently giving no consideration to much wider and much more important issues impacting the economics of ATMs and, therefore, the publics access to cash.

Groups of Smart ATMs, located in every significant community around Europe, can be the local touchpoints with Financial Services, for every European citizen.
However, if the European Parliament, Council of Ministers and Commission focus on the minutiae of DCC, with no appreciation of the wider issues, they put at risk the role of ATMs in the potentially golden future for Europe-wide Financial Inclusion.

I hope they realise their mistake, before it is too late.

Friday, 30th November 2018

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