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Admin Court rejects challenge to regulation of ATM payment scheme network

11/10/23

Mr Justice Sweeting handed down judgment today in the High Court in a judicial review claim concerning a series of decisions taken by the Payment Systems Regulator (“PSR”) concerning the LINK Network.

LINK operates the LINK payment scheme, which provides a mechanism for banks and building societies to offer their customers access to ATMs. There are two parties to each LINK ATM transaction: an Issuer Member (who issue debit/credit cards) and an Acquirer Member (who connect ATMs to the network).

NoteMachine – the Claimant – is an Acquirer Member on the LINK Scheme. When a customer uses a NoteMachine ATM, the Issuer Member, usually a bank or building society, has to pay an Interchange Fee to NoteMachine.

LINK adjusted the Interchange Fee Rate Card in 2018. It increased that part of the fees that is designed to protect ATMs at risk of closure but reduced the ordinary Interchange Fee by 20% (in four stages).

NoteMachine lodged a complaint with the PSR in 2020, contending that LINK was acting unlawfully and prejudicing public access to free to use ATMs because its changes to the Interchange Fee Rate allegedly failed to adhere to the principles of efficient wholesale pricing; of fair, reasonable and non-discriminatory access; and of good governance. 

In March 2021, the PSR decided that:

  1. It would not consider the complaint under s. 57 of the Financial Services (Banking Reform) Act 2013 because it had no jurisdiction to do so: it would consider the complaint under reg. 103 of the Payment Services Regulations 2017 (“the Jurisdiction Decision”).
  2. It would not open an enforcement investigation under reg. 103 because LINK was not in breach of its obligations under reg. 103 (“the Reg. 103 Decision”).
  3. It would not exercise its powers under the Competition Act 1998 to investigate LINK’s conduct (“the Competition Act Decision”).

NoteMachine challenged all three of those decisions by way of judicial review. The Judgment rejects all elements of the Claimant’s case and found that the PSR had not erred either as to the proper extent of its powers or the exercise of those powers.

The Judgment is here.

James McClelland KC and Tim Johnston appeared on behalf of LINK (the Interested Party) before the High Court, instructed by RPC LLP.