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The National Payments Implementation Programme (NPIP) was established to deliver a more efficient and cost effective payments environment in Ireland. Electronic payments are used considerably less in Ireland than in most other EU countries. A significant shift to electronic payments from the current high levels of cash and cheques could realise benefits to all stakeholders. Various estimates put the size of the benefit in the order of one billion euro per annum. Such an annual saving would increase Ireland’s competitiveness.

 

The NPIP has three core priorities:

• Cash Reduction
• Elimination of Cheques
• Increased Financial Inclusion

Led by the Department of Finance, the activities of NPIP Advisory Group focused on the preparation of a report to the Minister of Finance which made recommendations to enhance the NPIP process, the establishment of an appropriate governance structure and a number of measures that will that will deliver immediate and quick benefits to the payments infrastructure in Ireland. IPSO is currently engaged with the Department with a view to progressing this.

Background

The NPIP was established and sponsored by IPSO and the Department of the Taoiseach at the end of 2005 following a study by Accenture on the formulation of a national ePayment Strategy. Commissioned by the Department on behalf of the Information Society Commission, the resulting report highlighted that a significant move to electronic payments could deliver a 0.3% lift to Ireland’s GDP (over €500 million per annum at current levels).

 

The work of three cross-industry working groups, dealing with “cash”, “cheques” and “universal access” culminated in a National Payments Conference in December 2006 at which the then Minister for Finance, Brian Cowan, was the keynote speaker. The conference was co-hosted by IPSO and the Department of the Taoiseach. Following the conference an ‘Advisory Group’ was subsequently established to replace the three working groups. The Advisory Group’s wide range of (non-commercial) members ensured a broad range of stakeholder representation.

 

Activities of the Advisory Group included a included a study trip to the Netherlands, a survey of retailers views on the ‘cost of cash, analysis of payment trends in Ireland and the investigation of a number of innovative payment services.

 

In April 2008 a 2nd National Payments Conference, once again co-hosted by IPSO and the Department of the Taoiseach and this time held at the Royal Hospital Kilmainham, focused on the three core themes of ‘Improving Payments Efficiency’; ‘Financial Inclusion’ and ‘Innovation in Payments’. It concluded with agreement that a National Payments Plan was now needed to ensure the modernisation of the Irish payments landscape.

Activities

The budget speech in October 2008 included measures to reduce the stamp duty on Debit and ATM cards (to €5 per annum for a combination Debit/ATM card), while further increasing duty on cheques to 50c. The Minister for Finance, Brian Lenihan T.D. also announced the ‘establishment of a high-level group comprising representatives of the main stakeholders to direct the preparation and implementation of a national payments implementation plan’. The subsequent Credit Institutions (Financial Support) Scheme obliges participating banks to make biannual progress reports on a number of issues including the delivery of the national payments strategy, the promotion of financial inclusion, and the development of financial education. Finally, the ‘Recapitalisation Programme’ includes an obligation to provide and promote ‘basic or introductory bank accounts’. In support of this initiative the Government will arrange that stamp duty will not apply to cash cards for these accounts.

In 2009 the work of the Advisory Group continued, culminating in June with the submission of a report to the Minister of Finance which recommends the establishment of a task force to prepare and implement a National Payment Plan. The report recommends that plan should be designed to secure a decisive shift to electronic payments resulting in a reduced usage of cash and cheques as well as a significant reduction in the level of financial exclusion.

Progress

In terms of progress in moving from cash and cheques to electronic payments, figures for 2010 are encouraging. Cheque numbers continue to drop, showing an 11% decline on the previous year. Cheques numbers have now declined by over 40 million (31%) since 2005.

The number of card transactions has also grown substantially, with transaction numbers rising to over 315 million per annum by 2010 up 80% from the 175 million transactions in 2005. The value of these card payments in 2010, €22.8 billion, exceeds that of ATM withdrawals (€22.3 billion) for the first time. However, Ireland remains the highest user of ATM cash in the EU when measured on a per capita basis and at almost €5,000 per person, this figure is more than double the EU average. This high use of cash is an issue that needs addressing, particularly in the current economic climate, as cash incurs substantial direct and indirect costs.

Electronic payments, i.e. electronic funds transfers (EFT) and direct debits, also continue to gain in popularity with nearly 250 million being made in 2010, up almost 40% in five years from 177 million in 2005. When combined with payment card transactions, these now outnumber cheques by more than six to one.

 

More detailed information is available in the Industry Statistics section.

 

NPIP Advisory Group Members

• The Central Bank of Ireland
• Chambers Ireland
• Combat Poverty Association
• Consumers’ Association of Ireland
• Department of Agriculture
• Department of Finance
• Department of Social and Family Affairs
• Department of the Taoiseach
• Enterprise Ireland
• The Financial Regulator
• The Irish Banking Federation
• Irish League of Credit Unions
• The Irish Payment Services Organisation Ltd.
• The Railway Procurement Agency
• The Revenue Commissioners
• RGDATA
• The Small Firms Association
  

Some members of the NPIP Advisory Group at the launch of the ISPO Annual Review

L to R: Frank Maughan (Department of Finance), Tara Buckley (RGDATA), Paul O’Brien (CBFSAI), Pat McLoughlin (IPSO), Ciara Fitzpatrick (Enterprise Ireland), Margaret Lysaght (Revenue Comissioners), Russell Burke (IPSO).