Batopin, the changing ATM landscape in Belgium

You may have noticed that as of 1 July 2022, the Belgian government requires every shop to offer at least one electronic payment solution. In other words, whether it is a fixed payment terminal, a mobile payment terminal or a payment solution via smartphones, retailers can no longer require their customers to pay only in cash.

In addition to a clear desire to combat tax fraud, the authorities want to encourage the trend that has been observed for a few years now and that has been reinforced during the Corona crisis: Belgians are paying more and more electronically.

Indeed, in recent years, consumer behavior regarding payments has undergone major changes. Payments by bankcard are becoming the norm. This trend intensified during the Corona crisis, for obvious health reasons. A study conducted by Febelfin [1] in May 2021 indicated that 7 out of 10 Belgians (69%) have paid at least once with a payment card in a physical shop, compared to 49% in 2020 (before the health crisis). The strong development of contactless payment is not insignificant either. The experts also believe that this trend will continue and that cash withdrawals will continue to decline in the future.

At the same time, the operation and security of ATMs is costly for financial institutions. In addition, there is an over-concentration of ATMs in some places, while in others, there are few or no ATMs…

The four largest banks in the country have therefore joined forces in a joint project to optimize the network of ATMs in the country.

The Belgian ATM OPtimization Initiative (Batopin) aims to improve and optimize access to cash for Belgian consumers. Would this project be a new step towards the end of cash in Belgium?

The digitalization of the banking sector

We are seeing the advent of digital banking which has really taken off in recent years. It allows the customer to choose where and when to make transactions. 

Mobile and online banking subscription figures continue to rise, and new communication channels, such as video calls and chat functions, are also becoming more common.

Bank branches need to offer a multi-channel approach. The majority of operations that used to require the consumer to visit an agency can now be carried out online (opening accounts, reporting the loss of a card, changing credit limits, etc.). Banks are therefore becoming more of a place for exchange and advice. Under the strong pressure of digitalization, the number of physical branches has drastically decreased over the last few years.

The Batopin projecty

As the frequency of visits to agencies decreased, the use of ATMs also decreased and the unit costs of managing them increased for the banks. Since 2015, there has been a decrease in the number of withdrawals as well as the total amount of ATM withdrawals.

Batopin is a project of the 4 largest commercial banks in the country, namely Belfius, BNP Paribas Fortis, ING and KBC, which have decided to restructure their cash distribution network. Together, they want to manage the development of an optimal network of ATMs in Belgium, removing these machines from agencies and making them neutral. Security and efficiency are at the heart of this initiative, as is financial inclusion. Cash must remain accessible to everyone.  

The new Batopin CASH points will be located in places that are intuitively perceived by citizens as the ‘right’ place to withdraw or deposit cash. This takes into account, among other things, where the customer lives and works, where he or she uses cash (shopping centres, hotels, etc.) and how he or she travels (public transport, car, bicycle, on foot). In other words, the right number of ATMs in the right places.

In addition, customers will find in these CASH points all the services that their bank offers them today via the current ATMs (i.e. withdrawing banknotes, depositing banknotes, changing the PIN code of the card, checking the balance). It should be noted that it will not be possible to withdraw money from an account other than the checking account via a CASH point. Nor will it be possible to print out account statements or enter a transfer.

Discover the interactive map of the new CASH points: Nos points CASH | Batopin

Batopin is following the trend of ATM closure. The network managed by these brands represents about 73% of the total number of ATMs, initially counting about 5000 ATMs. This figure should be halved under the Batopin project to reach the target of 2240 cash points by the end of 2024. At present, about 340 new cash points have been opened. This project will allow banks to share their costs.

For the consumer, however, the costs of withdrawing money are not clear. Each bank may consider whether these neutral ATMs are considered part of their own network or not. For example, KBC has already announced that it considers Batopin ATMs as external to its own network, so customers who withdraw cash from them will be charged a higher price for this transaction than if they withdrew at their own bank. On the other hand, ING has indicated that they do not make any difference regarding the charging price between its own ATM’s and ATM’s not belonging to the bank.
Not always easy for the customers to find their way around. It is therefore important for each client to be well informed in order to prevent unpleasant surprises.

Jofico, the other belgian joint-venture

An initiative called Jofico was launched in 2020 by five other banks active in Belgium (Argenta, Axa Bank, Crelan, VDK and Bpost Bank) that created a joint venture to pool the management of their ATM network. This first project did not include closing the ATMs, but rather appointing an external partner with which they jointly entered into a lease agreement to manage the software implementation, maintenance and placement of the ATMs. Each bank has nevertheless retained its independence in terms of branding, pricing policy, choice of machine location, etc.

For information, sites such as  ATM Near Me | Nearest! Cash allow you to find the nearest ATM in a few clicks.

In Europe, similar project have already been deployed : In The Netherlands, one single company is responsible for the support of the design, the production and the installation of all the ATM’s for the 3 biggest Dutch banks : ABN AMRO, ING and Rabobank. Based on the similar observation of the increase in card payments and the need to reduce the number of ATMs, these banks have come together to introduce a new independent ATM brand named Geldmaat.

In Sweden, a country which is largely committed to the progressive disappearance of cash, the company Bankomat AB is responsible for the management of ATM’s across the country and is jointly owned by the five largest banks – Danske Bank, Handelsbanken, Nordea, SEB, Swedbank including Sparbankerna.

Towards a cashless future?

Some European countries are clearly in favor of a cashless economy.

Sweden is the perfect example, where cash has virtually disappeared and many shops clearly display their rejection of cash. Cash payment represents about 1 transaction in 20 (compared to less than 1 in 2 in Belgium). The authorities have also set themselves the objective of completely eliminating cash by 2030 in favor of electronic payments. Those involved in this dematerialization often put forward the argument of the fight against fraud and money laundering.

France and Belgium still adhere to the European laws governing means of payment in the euro zone. These state that: “Cash is still the main means of payment in the euro area, […] Ensuring that it is accepted everywhere is therefore an essential part of the payment system […]. Merchants and other private businesses cannot refuse cash payments.[2]

There is therefore no question, a priori, of derogating from this. However, in other countries, where this ban on cash is also in force, it is accompanied by exemptions. In Switzerland, for example, retailers must accept cash… but may refuse it if they clearly announce it ahead and justify it.

The need for cash is changing but still very real

The disappearance of cash is on the horizon. The consequences would be both economic, but also philosophical and societal.

Some consumers perceive the switch to 100% digital as an infringement of their freedom or even their privacy. Cash is a public good (coins and banknotes are issued by central banks) whereas the banking system remains a private system, managed by commercial companies whose aim is to make a profit. For some, the disappearance of cash would therefore be a loss of freedom: cash allows people to dispose of their money outside of the banking system.

Then, a disappearance of cash would only increase the digital divide. Less developed regions or certain sections of the population would simply be excluded. Households with lower incomes or that are unbanked rely heavily on cash. These people often have to manage their budget to the nearest euro and this is easier done with cash. A study conducted by the King Baudouin Foundation in 2020 indicated that just over 30% of Belgians have little digital literacy and almost 8% of the population has no Internet access.[3]

Fortunately, the digital inclusion of all consumers is something that the banking sector is aware of. Several projects have been launched in this respect. For example, we can mention the 123.digit.be module, which offers assistance with mobile banking, or “J’adopte la banque digitale”, which organizes information sessions throughout Wallonia and offers practical help for the transition to digital banking.

If electronic payments seem more convenient for their speed and ease, and many consumers are attached to it. Cash remains interesting for many reasons:

Firstly, it is the easiest way to make up for electronic payments in the event of a breakdown, power cut or computer bugs.

Indeed, beyond its transaction function, cash has a reassuring image and serves as a store of value. Between 28 and 50% of cash is held for hoarding purposes. This holding of cash responds to a need for security, with economic agents choosing to keep money for precautionary purposes in order to protect themselves from future hazards, particularly in periods of economic uncertainty or political unrest. Hoarding also helps to cope with the fees and negative rates imposed by banks on certain private and savings accounts.

Finally, as mentioned above, cash represents a certain form of freedom from banks, guaranteeing anonymity, instantaneousness of the transaction and offering flexibility to its owner.

The British and the Swiss examples as a compromise

Despite the systemic evolution of service models and the strong pressure towards more digitalization, it seems clear that cash has not yet completely lost its raison d’être. In order to compensate for this drastic reduction in the number of cash withdrawal points on our territory, a complementary avenue that could be explored is to offer the possibility of withdrawing cash from tobacconists/bookshops. This system is widespread in the United Kingdom and has advantages for both parties. On the one hand, it allows the network of cash outlets to be denser and, on the other, it allows tobacconists to diversify their activities.

In Switzerland, this concept has been put into practice by the brand Sonect that offers the opportunity to use a smartphone to withdraw money from more than 2,300 partner shops. Simple, secure, extremely convenient.

To conclude

As we have seen in this article, some countries are clearly in favor of the gradual reduction of cash payments and have already taken steps in this direction in order to support the consumption trends that have been observed. Authorities step into the breach to fight long-term challenges such as money laundering or fraud.

However, on the consumer side, some voices are being heard, reminding us how important cash is for certain segments of the population, including the less digitalized and those with the lowest incomes.

The commercial offer is therefore also adapting. Supported by favorable legislation, alternative solutions and new consumption, trends lead to the emergence of new players that are moving the lines. The Batopin project is a complex subject which, although it represents a new step towards the dilution of cash in Belgium, takes into account the different social, political and economic stakes. At this stage of the project, we do not have the necessary hindsight to judge if the project is truly detrimental to the consumer. However, there is no doubt that new alternatives can be found in the future so that everyone can manage their money as they see fit. In this way, the customers find more flexibility without turning their back completely on cash. As consumer habits evolve, so do the offers.

Sources

[1] Les Belges passent massivement au paiement numérique ; Les Belges passent massivement au paiement numérique | Febelfin ; 2021, May 15th, Febelfin ; Accessed on July 23rd 2022  

[2] La stratégie fiduciaire de l’Eurosystème ; La stratégie fiduciaire de l’Eurosystème (europa.eu) ; Febelfin ; Accessed on July 23rd 2022

[3] Baromètre Inclusion Numérique 2020 | Koning Boudewijnstichting (kbs-frb.be)

– Comment réalisons-nous nos opérations bancaires aujourd’hui ? ; 2022, march 4th ; Febelfin ;  Accessed on July 23rd 2022, on https://www.febelfin.be/fr/communique-de-presse/quand-la-banque-se-fait-app-etissante; pdf report: quand_la_banque_se_fait_app-étissante.pdf (febelfin.be)

– Notre projet | Batopin. Accessed on July 23rd 2022

– Study on the payment attitudes of consumers in the euro area (europa.eu) (2020, December) ; European Central Bank ; Accessed on July 23rd 2022 on https://www.ecb.europa.eu/pub/html/index.en.html ;  pdf report : Study on the payment attitudes of consumers in the euro area (europa.eu)

– Loomis et la Confédération des buralistes signent un partenariat exclusif pour déployer des DAB dans les bureaux de tabac ; 2020, October 20th ; Antoine Billon ; Accessed on July 23rd 2022 ; pdf report: 2021_Loomis-Buralistes.pdf