September 05, 2006

In late August, the PULSE EFT Association, one of the leading ATM/debit networks in the United States, and the LINK Interchange Network, the operator of cash machines in the United Kingdom, entered a reciprocal agreement in which members will be allowed to access each network's machines while traveling within both nations.

Under the arrangement, the 4,200 financial institution participants in the PULSE ATM/debit network will offer their cardholders access to all but a handful of the more than 58,000 cash machines across the U.K. while LINK will offer its 38 participating financial institution members access to an additional 250,000 PULSE cash machines in the U.S. The organizations expect the first live transactions to occur between their networks in early 2007.

Given the high tourist and business traffic between the two nations, both PULSE and LINK see this agreement as an opportunity to offer their FI participants another value-added service. Furthermore, notes Edwin Latter, LINK scheme director, the deal also shows banks there is an alternative to the Visa and MasterCard networks. "U.S. cardholders will now be able to access cash in the U.K. in a way that was not previously possible for them -- LINK connects all but an insignificant handful or more than 99.9 percent of U.K. ATMs," he states. "Neither Visa nor MasterCard can offer that."

Before PULSE and LINK decided to join forces, if the owner of a U.S.-issued ATM/debit card wanted to use an ATM in the U.K., the card would have to be branded with one of the international networks' brands -- Visa or MasterCard, says Cindy Ballard, PULSE executive VP, communications.

However, adds LINK's Latter, the benefits of this deal for U.K. cardholders will be a bit less dramatic since most U.K.-issued ATM cards are already MasterCard or Visa-enabled and, therefore, compatible with U.S. machines.

The two associations are currently working on establishing links to one another. "The process of establishing a connection with the LINK network is just like any standard processor connection," explains Ballard. "We are in the process of building an interface between the two platforms that will utilize IP technology. As soon as the connection is live, PULSE will send LINK the BIN files for any PULSE financial institutions that have opted in, and LINK will distribute them out to their acquiring participants. This process will work in reverse for LINK participants that opt in. Then, once the connection is up and running and BIN files have been shared, LINK will pass transactions from their acquirers through to PULSE, and vice versa."

The PULSE/LINK deal is by no means the first of its kind, notes LINK's Latter, nor will it be the last, he predicts. He indicates an announcement between China Union Pay (CUP) and Eufiserv, a continental European switch. "I think you will see more [such agreements] in the future as financial institutions across the world and the payments companies and switches they work with identify such links as a way of avoiding dependence on the two international card schemes. The LINK/PULSE deal is clearly important in that context. ... This deal will make possible a competitive alternative to Visa and MasterCard--and that is obviously good news to banks and cardholders in the longer run," Latter comments.

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