September 30, 2006

In August, the PULSE EFT Association (Houston), a leading ATM/debit network in the United States, and the LINK Interchange Network (London), the operator of the U.K. cash machine network, entered into a reciprocal agreement in which members will be allowed to access each network's machines while traveling within both nations. The deal will allow the 4,200 financial institution participants in the PULSE ATM/debit network to offer their cardholders access to nearly 58,000 ATMs across the U.K. and allow LINK to offer its 38 member institutions access to 250,000 PULSE ATMs in the U.S. The organizations expect the first live transactions between their networks to occur in early 2007.

Given the high tourist and business traffic between the two nations, both PULSE and LINK see the agreement as an opportunity to offer their participating institutions another value-added service. Previously, if the holder 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 the Visa or MasterCard brands, says Cindy Ballard, PULSE EVP of communications.

Further, adds Edwin Latter, LINK scheme director, the deal shows banks that 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 ... more than 99.9 percent of U.K. ATMs," he says. "Neither Visa nor MasterCard can offer that." The benefits of the deal for U.K. cardholders, however, will be less dramatic since most U.K.-issued ATM cards already are MasterCard- or Visa-enabled and, therefore, compatible with U.S. ATMs, notes Latter.

The two associations currently are 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 PULSE's Ballard. "We are in the process of building an interface between the two platforms that will utilize IP technology."

'Competitive Alternative'

The PULSE-LINK deal is not the first of its kind, notes LINK's Latter, nor will it be the last, he predicts, pointing to a recent deal between China Union Pay (CUP) and Eufiserv, a continental European switch. "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," he says.

"The LINK-PULSE deal is clearly important in that context," he continues. "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."

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