‘highly inefficient’ payment system
Ireland currently operates “a highly inefficient mode of payments”,
the National Irish Bank (NIB) stressed in a submission to the Irish
government, on which it called to “fast track” reform of the
payments system in Ireland. NIB, one of Ireland’s big-four banks,
estimates that inefficiencies in the payment system costs Ireland’s
economy €750 million ($1.1 billion) every year. This cost equates
to about 0.5 percent of Ireland’s GDP.
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“This is an unnecessary burden on exporters and households, which
is adversely impacting on our competitiveness as an economy,” said
NIB deputy CEO Kevin Gallen.
NIB lays the blame for the inefficiency of Ireland’s payments
system on the extensive use of cash and cheques. NIB noted that
according to European Central Bank, annual cash withdrawals per
consumer at Irish ATMs are well above the European average, while
25 percent of all transactions are done by cheque, compared with
less than 1 percent in many other European countries. Sweden is an
example of the latter.
NIB stressed that electronic payments is the route to pursue. Given
Ireland’s relatively young population and the strength of its
computer hardware and software industries, “we should be amongst
the world leaders”, said Gallen.
In its submission, NIB suggested the government announce decisive
steps to promote electronic payments. NIB mooted 1 November 2008 as
the day the government should launch ‘E-Day’. In respect of change,
NIB made the following recommendations:
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By GlobalData• the government should stop issuing or accepting cheques after
E-Day;
• the Law Reform Commission should investigate the issues involved
in making electronic money a form of legal tender by 2010 in order
to give people the confidence that if they have to make a payment,
they can do so by debit or credit card;
• the taxi regulator should make it compulsory for all taxis and
hackneys to accept payment by debit or credit cards by 1 November
2008; and
• the government should levy tax on the inefficient forms of
payment instead of on the efficient forms.
A decisive move to promote electronic payments represents a
“win-win situation which needs strong leadership from the
government to push through”, concluded NIB’s chief economist,
Ronnie O’Toole.
