Customers of online banks could pay more for their cash withdrawals. A solution envisaged by some banks to cope with digital competition.
Will cash withdrawals from distributors soon be more expensive? This is in any case a reflection that Nicolas Théry, president of Crédit Mutuel Alliance Fédérale. In an interview with Les Echos , Nicolas Théry wonders:
“Why can banks that do nothing for the network of cash dispensers – such as direct banks – use them at the same rate?”
According to Les Echos , Nicolas Théry and Philippe Brassac, Chief Executive Officer of Crédit Agricole SA, have met with Senate President Gérard Larcher to discuss this issue.
Read also: Bank charges down, a first for three years
1.3 billion cash withdrawals
Today, withdrawing money from an ATM machine in your bank is usually free because it is included in the cost of the bank card.
If the transaction is made in another distributor, it depends on your bank or the subscribed form. Some may “offer” their customers free of several withdrawals per month. Others on the contrary bill them from the beginning, as shown in a summary made in early 2019 by the site cBanque .
Anyway, for each withdrawal, regardless of the customer, the managing bank of the PLC is remunerated by an interbank fee of 57 cents charged to your institution.
This is to finance the installation, maintenance of the devices and their supply.
Direct banking, online banking or neo-bank?
When we talk about traditional nonbank banks, the names may not be very clear. To find one’s bearings, one must know that:
A direct bank is called a retail bank that does not have physical agencies in the area.
This may be an online bank , systematically backed by a traditional bank, such as ING Direct (ING Group), Boursorama Banque (Société Générale), Fortuneo (Crédit Mutuel Arkea) …
Or it may be a neo-bank , which is not linked to a traditional bank and offers a 100% mobile offer, such as Revolut, Orange Bank, Sogexia …
“Market anomalies on cash dispensers”
However, direct banks do not have a network to maintain, while any customer who holds a withdrawal card (often free) from these new competitors physical banks can use any of their automata. And most of the time, for their customers, cash withdrawals are free and unlimited. And the commission remains the same, 57 cents. It is this cost that could evolve.
Because the president of the Credit Mutuel Federal Alliance denounces in Les Echos “market anomalies on distributors, on which it is important to advance”.
“The first is that prices (billed by the institutions, ed) do not reflect the reality of the costs of using this interbank network, it is no longer possible. The second is that those who provide infrastructure development are not always the ones who use them.“
A maltreated network
In 2018, 1.3 billion cash withdrawals were recorded in ATMs, for a total amount corresponding to 126 billion euros withdrawn in notes.
But with the development of other means of cashless payment, such as contactless, payment by phone, online payment … withdrawals in automata are fewer, while we must still maintain the network.
Increased competition that motivates some institutions to close distributors that are not considered sufficiently profitable.
According to the Groupement des cartes bancaire CB , the governing body of the card and mobile payment system CB, there were 54,000 ATMs in 2018 in France. That’s 5,000 less than in 2012.
A fragile balance to be found for “historic” banking institutions, even as the Senate debated at the end of 2018 a bill to combat this desertification banking in rural areas , mainly affected by the disappearance of ATMs .
“A current system of access to cash very effective”
Today, according to data from the French Banking Federation (FBF) , “99.73% of French live within 15 kilometres of access to cash.” Joined by actu.fr , the FBF underlines:
“The networks of agencies and business centers located throughout the country are an essential asset of French banks. They allow institutions to be in close contact with all their customers (households, businesses, communities, associations …) for their daily financial activities but also for the realization of their projects.”
For the French Banking Federation, the “current system of access to cash in France is very effective”, and “with 37,209 branches in 2017, almost stable over one year (-0,1%), banks provide a presence territorial importance. Geographic proximity is the hallmark of the French banking model “.
A map of ATMs
For its part, the Senate voted the bill, which requires banks , when they close a DAB, to reopen in the vicinity for “a journey time by car equal to at most 15 minutes, unless in this same radius is already present at least one distributor.
In this context, the Banque de France is currently mapping out the implementation of ATMs, which should be finalised by the summer.
Another option for coping with digital competition would be for institutions, even competitors, to share their distributors , as suggested by the financial authorities.