Pakistan’s top competition watchdog has charged the country’s largest shared financial-services network and its member banks with illegally fixing banking and payments-related charges, a month after it conducted raids at the network’s offices.

The Competition Commission of Pakistan on March 16 issued show-cause notices to 1-Link Guarantee Ltd. and its member banks, alleging they fixed charges associated with ATM cash withdrawals, utility-bill payments and interbank funds transfers.

The agency became suspicious of collusion because of the banks’ uniform rates for ATM cash withdrawals, a spokesperson for the watchdog says.

Over the past month, the commission conducted with law-enforcement agencies a search and inspection of the offices of 1-Link and the Pakistan Banks Association over their suspected role in providing a platform for the alleged collusion (see story).

The inspections revealed that that the founding members of 1-Link had executed an agreement that all new members had to sign. “This agreement bound members to follow the agreement’s terms and conditions, including the fixed ATM withdrawal charges,” the spokesperson says.

Similarly, the search and inspection also revealed that 1-Link had signed agreements with utility companies and with TPS Pakistan Pvt. Ltd to fix the rates for bill payments and funds transfers respectively, he adds.

TPS Pakistan is a Pakistan-based technology firm credited with establishing the e-banking infrastructure for 80% of the banks in Pakistan.

1-Link also provided a forum for member banks to discuss matters of common interest, including the rates of ATM cash withdrawals, bill payments and funds-transfer services, the spokesperson says.

“It appears that 1-Link has issued schedules of charges periodically to its member banks and taken decisions to fix fees amongst them,” he says.

These include the interchange fee paid by issuer bank to acquiring bank for ATM cash withdrawals, interchange paid by sending banks to beneficiary banks for funds transfers, payee bank fees for bill payments, and charges for ATM cash withdrawals and bill payments paid by the customers of member bank.

This alleged fixing deprives banks to individually bargain or negotiate these rates based on their own business dynamics, the spokesperson alleges.

The regulator has not brought any charges against the Pakistan Banks Association, according to the spokesperson. 1-Link declined to comment on the story.

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