Pulse EFT Association LP and Link Interchange Network Ltd. of the United Kingdom announced a deal Thursday to let customers of banks in their automated teller machine networks use most of the networks' ATMs.
It would be the first time Pulse cardholders were permitted to use Pulse ATM cards outside the United States.
Pulse's parent company, Discover Financial Services LLC (which itself is part of Morgan Stanley), announced a similar reciprocal arrangement Wednesday with JCB Co. Ltd., Japan's largest card issuer and acquirer.
Link, of Harrogate, England, operates the UK Cash Machine Network, which has 58,000 ATMs in the United Kingdom. Unlike many other ATM networks, including those of Link's two main rivals in the United Kingdom, Visa U.K. and MasterCard International Inc., the network does not support point of sale debit transactions.
Cindy Ballard, a Pulse executive vice president, said in an interview Thursday that the Houston company decided to team up with Link because "there is high U.S. tourist and business travel" to the United Kingdom, "which we think will provide additional value to our Pulse participating financial institutions, and their cardholders, and vice versa."
She noted that Pulse's card-issuing banks must opt in to take advantage of the Link deal. She would not say whether Pulse is interested in pursuing similar reciprocal deals in other countries.
Last year Pulse and Discover struck a reciprocal deal with China UnionPay, the bank-card acceptance network. Pulse now accepts China UnionPay PIN debit cards in the United States, and Discover cardholders can use their cards at any UnionPay merchant locations and ATM in China; that deal did not provide for Pulse ATM cards' acceptance in China.
Edwin Latter, Link's scheme director, said the Pulse deal was his company's first in the United States.
It "shows it is possible to challenge the current dominance of Visa and MasterCard," Mr. Latter said. "They effectively have a duopoly over cross-border transactions at the moment, and the establishment of these connections makes it possible to compete with them, and undercut them, to the benefit of banks and merchants and consumers through lower fees, and more attractive exchange rates."
Mr. Latter said that Link might also establish relationships with other PIN debit networks in the United States, Mr. Latter said, but Pulse was the "fastest off the blocks here. They've pursued this piece of work on the technical side and commercial side very quickly."
Mr. Latter and Ms. Ballard said the two networks would be ready to handle each other's transactions early next year, but before that can happen, Pulse and Link must make their two "slightly different [transaction] message types" compatible, Mr. Latter said.
He said U.S. cardholders using Link's U.K. ATMs will probably be the first to take advantage of the deal. Almost all U.K. ATM cards can use Visa's Plus or MasterCard's Cirrus debit networks, but many U.S. ATM cards still cannot use either of those networks, and therefore cannot be used with any ATMs in the United Kingdom now.
"However, as we develop this, it will be possible to offer to U.K. card-issuing banks an alternative to using Visa and MasterCard, and clearly if that's attractively priced, they may be interested," he said.
