In 2006 Monopoly, “the fast dealing property trading game” introduced an electronic version of its famous board game. 9 years on and reality has yet to catch up with fantasy. This years’ budget however, emphasises the Government’s commitment to create a more secure and efficient payment ecosystem in Ireland which could potentially pave the way for a cashless economy. This is to be welcomed. The highlights of the budget from a payments perspective are set out below:
- The maximum single charge on contactless payments will increase from €15 to €30;
- The introduction of a cap on interchange debit card transactions at 0.10% of transaction value. This is half of the value required by new EU Regulations. These reductions, the Government says, will save retailers an estimated €36m per year in fees. It is hoped that such savings will be passed on to the consumers.
- Stamped duty on payment cards will be scrapped and will be replaced by a per transaction charge of €0.12 for ATM transactions. Consumers however, will not have to pay the charge to obtain cashback from retailers. The reasoning behind this is that cashback received from retailers are usually at much lower levels than ATM withdrawals. In addition, cashback is seen as a cost effective way for retailers to recycle their cash without having to incur bank fees and reduces the security risk of holding large sums of money on their premises.
Ireland still lags behind the likes of the Nordic countries, which stand out as trail blazers in the electronic payments sector. Denmark, for example, recently announced that it will be removing the obligation on selected retailers to accept payment in cash. Nearly a third of the Danish Population uses MobilePay, a smartphone application for transferring money to other phones and shops. Denmark, Sweden and Finland have the highest credit card payments per inhabitants in Europe. Ireland, on the other hand, has one of the highest per capita usage of ATMs for cash withdrawals in the EU. Irish citizens use ATMs 50% more often than the average EU citizen and withdraw twice the average amount of EU citizens.
Notwithstanding this, the changes referenced above, together with the adoption of new, more efficient, payment technology in Ireland, such as mobile payments, should encourage both retailers and consumers to move from cash to mobile and card.
Minister Noonan announced a reduction in the interchange fees associated with accepting domestic Irish credit and debit card transactions, ahead of the introduction of new EU regulations. These regulations, which come into effect later this year, will cap interchange on credit and debit card transactions at 0.30% and 0.20% of transaction value respectively. The government’s announcement goes beyond these regulations by capping interchange on domestic debit card transactions at 0.10%, making Ireland one of the lowest-cost countries in which to accept debit card transactions. This is a significant move, as Irish consumers now spend twice as much on debit cards as they do on credit cards.