Competition and regulation in the Finnish ATM industry

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Title: Competition and regulation in the Finnish ATM industry
Author: Markkula, Tuomas ; Takalo, Tuomas
Organization: Bank of Finland
Series: BoF Economics Review
Series number: 8/2021
Year of publication: 2021
Publication date: 14.10.2021
Pages: 61
Subject (yso): pankkiautomaatit; käteisraha; maksut; sääntely; kilpailu; kilpailupolitiikka; pankit
Keywords: Suomi; käteinen
Other keywords: ATM industry; cash; competition policy; optimal regulation; retail payments
Abstract: Declining ATM numbers pose a challenge for competition policy and financial regulatory authorities. In this report we review the Finnish experience of regulating the competition in the ATM industry. To analyze the Finnish developments we extend the model of Kopsakangas-Savolainen and Takalo (2014), and draw on the existing literature and benchmarks from the selected other countries. We document how changes in the ATM market regulation and market structure has decoupled the ATM network size from the declining cash use in Finland. The Finnish regulation has almost exclusively focused on foreign fees, while in general it would be better to regulate interchange fees. If the optimal fee regulation is not feasible, the authorities could also consider quantity regulation.

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