€40 duty on credit cards ‘should go’

THE €40 government duty on credit cards has killed competition in the market and should be scrapped in next month’s Budget, the Irish Bankers Federation (IBF) said yesterday.

The body, which represents more than 60 banks operating in Ireland, said taxes on credit, Laser and ATM cards had made Ireland one of the dinosaurs of Europe in adopting new payments technology and meant Ireland relied too heavily on cash and cheques.

Recent studies by consulting group Accenture put Ireland at the bottom of the European league table for usage of electronic and card-based payments.

Ireland was ahead of just one country Greece in working to reduce the emphasis on cash, which is seen in banking circles as inefficient and expensive because of high production, security and transport costs.

Cheques accounted for almost two-thirds of non-cash payments, a figure far higher than any other European country. The IBF said the Budget should abolish the controversial stamp duties, which include €20 levies on combined Laser and ATM cards and an annual €10 fee for using a bank card to withdraw money from cash machines.

The levies bring in €70 million each year for the Government, but the IBF said greater usage of electronic payments could save the economy up to €420 million a year.

Banks also complain that a 2003 change to the law governing credit cards stopped consumers shopping around for credit cards, because it penalised people who closed one account to open another with a competing bank.

Since last year, anyone who changes their credit card incurs the €40 charge twice, because they are deemed to have held two credit cards in a single tax year.

"These stamp duties undermine consumer competition, particular by acting as a deterrent against those consumers who wish to switch," said IBF chief executive Pat Farrell. The Consumers' Association of Ireland (CAI) threw its weight behind the IBF's comments.

"The stamp duties only serve to add to the burden of affordability and penalise customers who had embraced the move to a cashless and secure environment," said CAI chief executive Dermott Jewell.

"The latest slap in the face is that this environment now contains an anti-competitive and costly hurdle for those wishing to change bank.

"It is both ridiculous and unacceptable," he said.