Guest Post: The Payments Molehill

This guest post is written by Ronnie O’Toole, who is Project Manager for the National Payments Plan in the Central Bank

While the focus of policymakers continues to be fiscal and monetary policy, the need for further micro-economic reforms was highlighted by Richard Tol in the recent Het Financieel Dagblad article. Richard identified legal services, energy and transport as some of the ‘molehills’ that when added together can help tackle the national competitiveness ‘mountain’. The payments industry should be added to this list.

Quite simply, making a payment costs money. A recent ECB study estimates that the cost of payments among EU countries is spread within a range of 0.61%-1.43% of GDP, based on a common methodology. The most efficient countries are intensive users of electronic payments such as debit cards and EFT, while the least efficient remain dependent on paper-based payments such as cash and cheques. There are also non-financial costs linked to a high culture and cheque usage. Cash as a bearer instrument will always pose a physical security threat which is not as prevalent in other forms of payment crime such as card skimming. Further, there is a clear association between cash usage and tax avoidance, with studies showing that around one-third of all cash used in Scandinavia is in the shadow economy.

Ireland is one of the most inefficient users of payments in Europe. We withdraw more from an ATM in a month than a Dane does in a year, and are one of the few countries remaining who still use cheques. The National Payments Plan (NPP) was developed as a response, and launched last Wednesday by Stefan Gerlach in the Central Bank.

The challenge of promoting electronic payments is to a significant extent one of technology lock-in. This occurs when a particular technology is dominant because of scale economies, not because of its inherent qualities. You may want to use no cheques, and prefer e-banking. However If I send you payment by cheque you won’t decline it. What’s more, since I don’t give you my bank account number you can’t pay me electronically.

Technology lock-in can be overcome if a co-ordinator signals a change in behaviour. For cheques the NPP envisages the Government playing this role, ending all B2G and G2B payment by cheque from next year. This will be a powerful signal – all businesses have at least some payment transactions with Government.
Price incentives are also likely to be critical. As my paper in the last Central Bank Quarterly Bulletin showed, the banking sector is currently typified by a huge cross-subsidisation of cash/cheques by electronic payments. Only 46% of all cash related costs are covered by fees, with the shortfall being made up on the highly profitable card side of the business. The fees banks earn relating to card payments are two-fold – not just the consumer fees we all pay, but also the ‘swipe’ charges the merchant must pay.

The way we pay Social Welfare is in sharp contrast with practice on the continent. In Ireland around half of all social transfers are paid over in cash from post offices, while paying into a bank account is the norm elsewhere. This antiquated practice has led to Ireland retaining a high rate of financial exclusion. According to the 2011 CSO SILC data 17% of Irish households don’t have a current account, compared to less than 1% in most other northern European countries. This creates an unnecessary barrier to the world of work which operates largely with electronic payments. It also closes off options for people such as the ability to pay online or to access an appropriate level of credit from formal sources rather than moneylenders. Not only do cash payments result in this negative societal outcome, it is also more expensive for the public service to provide than the electronic alternative – a clear lose-lose situation.

Behavioural economics also has a role in promoting migration – can we ‘nudge’ people to use electronic payments? For example, if we want to lower the average ATM withdrawal then only smaller amounts should be presented as the default options on ATMs, and preferably on the right hand side. Smaller denominations in ATMs can also play a role. Further, when you are down to the last 5 cheques, the insert on the chequebook shouldn’t read “Don’t do anything, we’ll send you a new cheque book even if you don’t want one” (I’m paraphrasing) but instead “If you want a replacement cheque book then ring this number, though we won’t send you one if we don’t hear from you”.

While behavioural change using existing technologies represents the thrust of the NPP, there are also new technologies emerging that can greatly assist. Contactless debit cards are currently being rolled out by the banks, which will greatly speed up the time to serve in retail outlets. Further P2P payments using mobile telephones can act as a useful alternative in a number of circumstances to cash and cheques.
However, the NPP didn’t (and shouldn’t) pick winners when it comes to payments. The world of a single European market for payments (SEPA) is almost upon us, which could greatly increase the level of competition and choice in electronic payments. Already there are many firms based in Ireland – both indigenous and multinational – that are very successful in this space.

Research shows that different electronic forms of payments are ‘friends’ – countries that have adopted one form of electronic payment are far more likely to try out new innovations when they arise. For us, that means that we need to reduce our cash and cheque usage if we want to join the innovation revolution that is transforming payments globally.

Comments

comments

41 thoughts on “Guest Post: The Payments Molehill”

  1. The reason people do nto use electronic payments is because the Irish clearing banks are incredibly slow to process them compared to their european counterparts. The payment might not show up for a number of days. It might even be bounced after that.

    It was a condition of the bank guarantee scheme that the banks should get their house in order on electronic payments. This was implemented by way of paragraph 49 of SI 411 of 2008 – a fairly watery requirement for bi-annual reporting on their progress towards implementing the national payments scheme.

    Our “cheque culture” is not the problem. Neither is citizens’ and businesses’ willingness to embrace new technology. The problem is the brutal standard of management and strategic planning in our banks. In particular, our banks’ have no leaders with a strong background in ICT projects and no strong CIOs. They are pathetic compared to financial institutions in other countries.

    They are particularly pathetic about getting themeselves in gear when a joint initiative amongst the banks is required to generate an economic dividend for the country.

    The reason for that can only be weak bank regulation by the Central Bank. It is up to the Central Bank to devise effective strategies fro maknig banks “jump together” where it is needed in the interests of the economy. The pace of progress on such issues is glacial (in the best traditions of the Irish Public Service). The Central Bank have allowed the mortgage crisis to fester and they have also allowed the development of ICT infrastructure for payments to lag other countries massively.

    I know it is not easy in the Public Service these days but, in the words of some english dude: “Sometimes doing your best is not good enough. Sometimes you must do what is required.”

  2. BTW – fair play to Ronnie O’Toole for posting the guest post. Here’s hoping he will be able to make a difference.

  3. The information available on Irish bank statements is quite pathetic compared to what is standard practice in European banks.

    It’s no surprise that cash / cheques still dominate when the quality of data and case fields are so small.

  4. If contactless transactions are to take-off, then the bank fees must fall. Paying 20-25-30 cent in current a/c fees on a low value 5-15 euro transaction is too much. The marginal fee on a low value tx should be very low, even nil. Maybe a way around this is to have a higher annual current a/c fee, and much lower fees on card transactions?

  5. The DSP switched a lot of JSB and JSA payments back to cash due to welfare fraud. So if we want to move JSB/JSA payments all to current a/c, then we need much better ID systems. Some DSP local offices are being equipped with electronic ID systems, I think.

  6. The problem of technolgical lock-in is a familar one to businesses working in the tech sector. It is a well-established fact that customers are not interested in new technologies that offer them only marginal advantages over pre-existing incumbent solutions. To solve this problem, you have to demonstrate a compelling advantage of the new technique in at least one area of application.

    Electronic payments have so far failed to pass this test. It is sad that our government intends to try to force us toward electronic payments, by making cash and cheques more difficult to use. I suppose we just have to hope that the tech firms working in this area can come up with a compelling solution before our government arrives to punish us for not appreciating the currently marginal benefits of electronic payments.

  7. As others are saying, we get fees for at-the-margin use of ATMs or debit cards here in Ireland. So it’s cheaper to take out €400 and carry it in your pocket. Perhaps if the regulator banned those fees it might help? NB cheques remain a useful piece of technology for medium sized transactions like buying a car or having repairs done on a object, where the cheque can be handed over in return for the finished work, and the transaction is properly recorded in the way that a large wad of cash is not …

  8. A government that places a tax on ATM cards and debit cards, which exists in few other places, cannot really claim any credibility on this issue. I suggest they abolish the duty on credit cards, but tax the interest payable instead, and abolish that on debit cards entirely.

  9. Bah just use bitcoin, fees are almost non existent, you pay a tiny fee (like a few cent) if you want the transaction to be done within few minutes.

    I happily accept bitcoin in my business since with paypal and creditcard lose up to 10% due to fees, chargebacks and fraud

    none of that crap with bitcoin! just make sure to convert back to USD/EUR asap since rates are volatile

  10. I’m not clear on why one would pick on card payments as the source of cross-subsidies for cash and cheque payments. If that was a fair reflection of the economics, then banks would logically only provide accounts to active card users, and would close down accounts of non-card users to avoid losses.

    In fact, banks have a range of sources of profitability, all of which cross-subsisdise cash and cheque payments to varying extents. It’s not obvious that card transactions are even among the more important sources of cross-subsidisation.

  11. @skeptic01
    “I suppose we just have to hope that the tech firms working in this area can come up with a compelling solution before our government arrives to punish us for not appreciating the currently marginal benefits of electronic payments.”

    The tech firms came up wioth the benefits long ago. It is not our people or businesses that are so different to other European countries, it is our banks. They are useless.

  12. End tax on debit/credit cards. If I was a credible government that’s the first thing I’d do.

    2nd thing force banks away from per transc charges. 20c to buy a little of milk with a card it tesco.

    3rdly Do what’s necessary to force the corner shop away from €10 limit on card purcahses.

    4thly Inter Bank Electronic transfer have to clear wwwaaayyyy faster, like immdeiately. If a guy owes a mate €100, he’ll transfer it on his iphone when he remembers if he thinks it’ll be there immediately, as opposed to a day or two.

    Finally, security and redundancy should be front and centre. Ulster Bank mess is proof of that.

  13. The reasons why cheques are still in use are simple:
    -The cheque is in the mail. Standard excuse for delaying making a payment.
    -The one signing our cheques isn’t in the office. Another standard excuse.
    -Some cheques aren’t even cashed by the recipient. Can be very profitable.

    Creditor rights are weak in Ireland, has a lot to do with the legal system. The legal system is very good to lawyers. Others might have a different opinion of the legal system.

    Electronic payments will become more common when creditors get stronger rights (fees and interest for late payments). Anyones guess when creditor will get more rights in Ireland but the debate about debt write-offs makes me believe it’ll take a very long time.

    Being tax-compliant in Sweden can be a chore. The easiest way is to be tax-compliant is to pay and receive payments electronically as the cash can be traced and easily documented. Tax-collection in Sweden is very effective and the penalties for not being compliant can be very serious – therefore the trade prefers to be done electronically. Will Ireland go the way of Sweden and become more efficient in insuring that taxes that are due also are paid? More frequent and tougher tax-audits…

    In Sweden I pay with card 99% of the time. In Germany I was told that shops don’t like the charges from credit card companies and many preferred the cost of handling cash. I suppose it all depends, the fees to credit card companies are known but the costs of handling cash is estimated and shops make their choices based on their circumstances.

    There might be other ways to get Ireland weaned of cheques but as far as I can tell the two main things would be: Stronger creditor rights and more efficient tax-collection.

  14. I think a more fundamental issue among Irish citizens (as with German citizens) is trust. I think a lot of people trust cold cash and feel it is something over which they have undisputed control, whereas electronic payment systems are controlled by large entities over whom they have no influence.
    Electronic transactions are visible and slow and not private from a grasping government which had no compunction about looting their pension funds. Given numeracy and literacy levels (40% or Irish adults struggle with basic maths) and ongoing confusion marketing policies by banks, some will fear inadvertently incurring charges for credit or for reducing account balances below arbitrarily-set bank thresholds which they cannot conveniently monitor in realtime.

  15. Thanks for all the comments. While I can’t answer all of the questions, here are a few points of clarification/interest in no particular order:

    @John – Electronic transfer in Ireland is next day, as long as you make the transfer before the cut-off point which differs among banks, but is typically mid-afternoon. However to answer your direct point on mobile, in the National Payments Plan we are helping promote the availability and use of mobile P2P payments by making this interoperable. These have the advantage over traditional electronic payments in that you don’t need to know a persons bank account number, just their mobile number, and payment or notification of that payment is instantaneous.

    @Tony/Jesper – I think the point about privacy and cash that Tony makes is valid. However the flip side is that cash also is critical for the survival of the shadow economy. Every 5% increase in electronic payments is associated with a 2-3% fall in the size of a countries shadow economy.

    @BeeCeeTee – In the Q2 Central Bank Bulletin I produce a graph which shows the sources of profit and loss by payment instruments for Irish banks. While you are right that we shouldn’t necessariy read straight across from cash to card, it is fair to say that the profit on card is almost equal to the loss on cash, and that these are close substitutes. For example, at the POS they are the only two viable options remaining as cheques aren’t accepted (though ebanking might be by mobile in the not so distant future).

    @many – The points made in the responses about pricing are well made, and two recommendations in the NPP relate to this, one on merchant pricing and one on consumer pricing.

    @skeptic01 – The plan does not intend to force people away from cash and cheques, and actually makes a point that they will be available to those consumers that want to use them. The one exception is the ending of B2G cheque usage, due to the problems businesses have with late payments. However the number of cheques actually covered by this recommendation are small – this recommendation is mostly about signal and the Government acting as a coordinator.

    @Stephen – comments on the DSP are well made. We give out about €10bn a year in social welfare, which is equivalent to around half the entire ATM network. Fraud prevention is an obvious policy issue that they have to consider, as is security, cost and tackling financial exclusion.

  16. @Ronnie O’Toole

    Another issue is that Irish banks do not identify or vouch for the source of a money received by EFT. They allow the sender to put in whatever narrative they want. Many narratives are business names rather than company names or legal entities and even if the narrative describes a legal entity you cannot be sure it actually came from that person’s account as it is only a free text narrative. This is beyond reidiculous considering the strict AML obligations being enforced by the Central Bank and others.

    “Electronic transfer in Ireland is next day, as long as you make the transfer before the cut-off point which differs among banks, but is typically mid-afternoon.”

    That means transfer time is two days if you miss the cut off. That is appalling by the standards of the most advanced EU countries. People often have to insist on bank drafts and all the overheads and risks they entail. Why is it the case that Irish banks are so far behind the rest of Europe and what can the Central Bank do (beyond wringing their hands) to change this?

    BTW – some cut offs are earlier than mid-afternoon. There are significant costs for same day money transfers if you need to force the payment through. Why? International payments are another kettle of fish.

    The whole issue of our banks failure to provide proper electronic funds transfer facilities has been on the policy agenda for more than 6 years. Our failures do not stem from behavioural psychology of consumers but rather through our inability to compel our banks to do diddly squat.

  17. @Ronnie,

    I read your paper in the Central Bank Bulletin when it came out. I felt that your observation that cash and card are close substitutes and that the profit on one is near equal to the loss on the other only supported the conclusion that card was subsidising cash in a hand-wavey sort of manner. I think the right way to get a handle on the structure of cross-subsidisation at banking industry level is to consider the structure of cross-subsidisation at the level of the individual customer relationship, and to aggregate up from that.

    If cross-subsidisation was genuinely between card and cash, then as you throttled back on cash use you would expect to see competition between card providers drive down card-related profits to compensate bank customers. If that is not an important mechanism for cross-subsidisation, then one would expect card related profits to go up as card margins stay the same and volumes go up.

    As I think your assessment that the cross-subsidies in favour of cash come principally or wholly from cards is unfounded, I think there is a clear and present danger that the banks will capture most or all of the economic benefit of a shift from cash to card in Ireland. Perhaps that is the Central Bank’s intention.

  18. In this context it is worth looking at an article by James Surowiecki in the current (April 29th) issue of the New Yorker. Drawing on a recent study by Ed Feige, he notes the recent growth of the ‘informal’ economy in the US, as shown by the increasing quantity of cash in circulation and the declining proportion of the population holding bank accounts. He quotes another study suggesting that consumption in the US has held up well despite the apparent decline in the numbers at work and the rise in unemployment. ‘The severity of the recession and the profound weakness of this recovery may mean that a lot more people have entered the underground economy and have to stay there longer’. Could this be true of Ireland too?

    By the way, the belief that Ireland is one of the most cash-intensive societies in Europe does not jibe with anecdotal evidence for countries like France, Portugal and Italy where most of the transaction one observes day to day are cash based and tradesmen are reluctant to give you a receipt for odd jobs. Ever got stuck in a post office in one of these countries on social welfare ‘pay day’? I have been struck by the quantities of 100, 200 and even 500 euro notes being handed out. When did you see one of these in Ireland?

  19. Have to say my experience as a consumer is that bank IS systems are plain awful. I would want to see much much faster slicker and customer focused before I would abandon cash/cheques.

  20. Just came from a dinner with some Swedish former bankers, I told them about creditor rights in Ireland and also about the new guidelines about personal bankruptcy. Their take was: But a system like that can’t work. My reply: It doesn’t.

  21. 1. @PeterStapleton

    +1.

    Why do only use €50 notes? I produced a €200 note in a shop (to pay for something that was almost €200) and I was treated like a criminal. Now if I get one at the bank I ask them to change it. I’m told in Germany, they’d rather pay with €500 than use a credit card. Cash is free.

    2. Transferring money internationally costs a fortune. Relations sending money to each other often risk sending cash in the post and it IS a risk. e.g. my mother-in-law in NI will often send small cash gifts in the post to us, and they get here. Any time I’ve tried sending a cash gift to NI, to a niece or nephew, it’s robbed. Looks like the Royal Mail workers are more honest than An Post workers. But how else do you send £20, 30 or £50 to the UK without paying ridiculous charges? God, once I tried to send an M&S gift card. What a palaver. Oh for honest postal workers.

    3. From a big brother point a view, I’ve deliberately substituted cash for laser/cc transactions. Germaine Greer said that when people read BIg Brother, and the level of surveillance shocked them, they assumed that such surveillance would be imposed. Instead we volunteer to be tracked – right down to every small purchase, from laser to loyalty cards. The whole thing is creepy. Cash = privacy.

    4. And finally, re online and telephone banking. I go into the branch deliberately to keep those girls in a job. And where would Ulster Bank have been last year without people in branches? Over reliance on electronic banking is dangerous.

    But other than these foibles and paranoias, Ronnie is right 🙂

  22. I had some contact with Ronnie O’Toole perhaps a year ago warning of the dangers of a full move towards electronic money.

    I pointed out the different origin of cash and electronic money and that the little bit of seigniorage, or non-tax revenue, which the Department of Finance receives through the printing of cash is very welcome.

    It’s worth bearing in mind that every electronic euro has a corresponding interest-bearing debt and a fully electronic system will struggle with stability due to the inevitability of loan defaults etc.

    Ronnie was unsure of my macroeconomic predictions but I’m sure he wasn’t instantly familiar with how temporary electronic money is either since its deleted through loan repayments.

  23. Cheques will not go away anytime soon.

    Some innovations are useful:
    Debit card use online.

    Discount for cash instead of credit card usually 2-5%. I have only seen one restaurant advertise it at point of sale. Many do it on request.

    Single transaction credit card numbers associated with your main card number. You can specify the amount to the cent. Very useful in the US.

    Cheques are very useful when dealing with tradesmen or when buying things that are custom made and costly. Proof of payment is useful particularly when it is referenced on the chq.

    The rewards cards on the whole are a rip off now that they charge the merchants up to 6%. The mark up for credit card processing is on your bill and stays there unless you negotiate a discount for cash.

    From the point of view of merchants their customers who buy in to “rewards” cards are not too bright. Of course every body is paying for them including people who fork over cash uncomplainingly.

    Online banking including balance transfers, bill paying, transfers to other institutions all very useful.

    There are still people who go to the branch, use cheques and never touch ATM, PC or even telephone banking.

  24. “For example, if we want to lower the average ATM withdrawal then only smaller amounts should be presented as the default options on ATMs, and preferably on the right hand side”

    This sort of attitude – let’s bugger things up a bit to make it less convenient for people to do what they do now – is really indicative of a rather repulsive way of thinking by Ronnie O’Toole. Find a way to make it easier for people to use electronic payments rather than making it more difficult to use cash. Otherwise it just becomes an excuse for institutionalising poor customer service. The person who wants 400€ cash should be able to get it with one touch use of the ATM, just like the person who wants €20, and the urge to try and get people to use electronic payments should go hand in hand with making it easier to use cash where they wish to do so.

  25. @BeeCeeTee

    I think this is an excellent point. “I think there is a clear and present danger that the banks will capture most or all of the economic benefit of a shift from cash to card in Ireland.”

    If we are pushed into electronic payments, is there any evidence that banks will reduce the costs to both payer and payee? They’ll just pocket the charges and probably keep increasing them.

    If we thought that using less cash, using fewer branches etc would reduce costs to banks and therefore reduce OUR costs, that would be fine. But they’ll just keep increasing their profits. And then one day everything breaks and we’re all up the swanee.

    Ronnie, I think a more compelling argument for why we should dump cash is required. Other than reducing costs for banks (but no one believing it will reduce costs for their customers) why should we do this?

  26. By the way, we should recall Paul Volcker’s dictum that the only socially valuable piece of financial innovation over recent decades was the introduction of ATMs.

  27. Thanks for the additional comments.

    @Saray/BeeCeeTee – your points are well made. The NPP contains a clear recommendation regarding the cost of payment instruments which reflects your concerns. Simply put, if cash is hugely loss making for banks and card is profit making, then the migration of a consumer from the former to the latter will likely only benefit banks. Pricing that more accurately reflects the cost of provision sends the right signal to consumers, and rewards them for using efficient means of payment.

    @Peter – Ireland is the most cash intensive country in the EU based on ATM withdrawals. I’m not sure about Italy and Portugal, but my understanding is that paying social welfare into a bank account has been mandatory in France since the 1970s (see Georges Gloukoviezoff’s paper on financial exclusion).

    @many – I think the main IT gaps are in relation to ebanking patforms for SMEs (can’t use personal ebanking and find the corporate ebanking platforms too cumbersome for their needs), and the lack of integration of payment messages with accounting and other business systems. These are issues which I feel will require further work.

  28. @Ronnie,
    Going quickly through the NPP, I don’t see anything about any of the benefits to banks from the switch to from card being made contingent on reductions in their card fees.

    What I do see is the switch from Laser and ATM card to Visa and Mastercard Debit Card being used as the occasion for price gouging of retailers by the banks, covered by some very thin excuses about increased functionality and the cost of providing it. Even before it was written, the plan seems to have been off to a bad start on fair pricing of card transactions.

    If that is representative of what are likely to see with the shift to card, then I think it may already be time to go back to the drawing board on the NPP, and find mechanisms to prevent bank profiteering on transactions. For example, if you look to the US, you will see plenty of examples of businesses trying to cut banks out of the transaction loop by offering low cost technology-enabled tranactions. Perhaps we need some of that sort of competition here too to keep manners on the banks.

  29. @ Sarah (and others)

    To prevent cash or valuables being nicked in the post (as I taught to my mother whose Birthday cards with cash to grandchildren often went ‘missing’ in the post):

    Address the envelope with card and cash inside to favourite neice/nephew/grandchild as usual but then put this nice card inside a dirty brown envelope addressed to the parents in the house. Better still, re-use an envelope from an insurance company or other but always send to the parents and just use his/her initial and last name. What you absolutely want to do is give the impression that this is fairly useless letter being passed in the post to an adult. Similarly, with emigration on the rise, if you want to send cash to a son/daughter in America or Australia (or even a gift), then just disperse the notes inside the pages of a paperback and put this in a dirty brown envelope with stamps and airmail stickers placed haphazardly. If sending a valuable gift re-use a box from some industrial supplier or something similar. If you can use a franking machine – all the better. It all contributes to the appearance of something unimportant being sent in the post.

    Works every time for me and anyone I have passed on the tip to.

  30. ooooh the book one is genius. Thank you!

    Did you read about that poor person whose relations sent them €500 from Canada to help pay for an emergency? It was actually registered and they still got the envelope, ripped and empty.

    I’m not sure if there are many Herald readers on this blog, but I rashly mentioned this thread to the opinion editor and now I have to write 650 words about it. Should be in Friday if anyone’s interested.

    (Hopefully I’ll get the book advice in).

  31. Sarah, two reasons to use less cash and more card payments are (1) less tax evasion and (2) less crime. [I realise (1) is a subset of (2)].

    Cashless economy would mean no cash nixers, no cash income tax-free, so less tax evasion by consultants / taxi drivers / teachers giving grinds.

    Cashless economy means no bank or PO robberies, no burglaries of elderly people, much less prostitution or illegal drug sales.

  32. I’ve mentioned the tax evasion but said while this argument is fair, it won’t convince consumers, because even though we would be better off if all payments were taxed, individually, we just want to keep sweet with the plumber.

    On no robberies, well wouldn’t there just be different robbers and different kinds of theft?

    e.g. I joke in the column that it would take long to torture my PIN out of me.

    ok, there would be less, but robbers will find a way.

    Also what about the Ulster Bank problem? We’re Ulster Bank customers and were miraculously unscathed by last year’s fiasco because most of my payments, both in and out, are manual not automatic.

    I guess its one of these things where logic and evidence are on the electronic side, but there are good reasons to be cautious.

  33. Our first child was recently born and my parents were visiting me here in Germany a couple of weeks ago. This led to a huge hole in the Irish banks cards/payments system. Most of their Irish cards didn’t work here in Germany. These are the new improved ones designed to replace the Laser cards. They didn’t even work in ATMs nevermind for retail payments. I guess the price gouging/late payments etc. mentioned above doesn’t meet the approval of German retailers or banks. Why do Irish banks implement card systems that are incompatible with the rest of the Eurozone? My mother had a card from TSB that worked in some ATMs. I find it all a little hard to understand, I left Ireland in 1998 and at that time I had none of these problems getting an Irish card to work anywhere.
    Ronnie O’Toole cannot be for real if he wants to limit the amount of cash you can withdraw from an ATM will negatively encourage people to use payments. As a “tourist” in Ireland from a country with an incompatible card system maybe I would need to stock up on cash (probably before I arrived in Ireland). German cards have a charge (minimum 5€) per cash withdrawal from ATMs other than from the home bank. In such cases, small withdrawals abroad are disadvantageous for the customer.
    Ronnie: can you look into getting the banks to provide transparent inexpensive competent systems first and then maybe the customers will embrace them?

  34. Hi Ronnie

    Oh thank you 🙂 I didn’t want to offend and wanted to give all your arguments a good airing but one must take a position. ( I must go buy the Herald and see if they made any changes to what I filed. ) Also I knew I didn’t do justice to your correct title but 650 words is merciless and “Central Banker” is much shorter than your proper title!

  35. An anecdote from the front-

    A person recently sent me a cheque. They had ordered EFT of funds into the account the cheque was drawn on. The cheque was presented 2 days after the EFT was ordered and it was bounced. The person contacted the bank and was told the EFT could take up to 5 DAYS. They were then told they could not get a draft. Eventually they had to get a POSTAL ORDER to send the money by post.

    It’s the banks, not the customers.

  36. The issue is simple. The main irish banks e banking systems are not capable of providing the necessary service and have high charges for debit card transactions. Their technology is behind many EU competitors. Ironically the best way to mange your costs is (i) withdraw large amounts of cash at one go and (ii) use your credit card and clear the balance at month end.

    The second problem is set out clearly by the author. Customers are “too lazy” or not incentivised to switch to electronic payment. It is very difficult to make electronic payments, especially for matters such as club memberships. We need a stronger “polluter pays” approach to make cheques uneconomic to use. We also need to make it compulsory to show bank details on all invoices (like in other other eu countries) and provide simple ebanking options for small companies and not for profit organisations.

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