Access to cash legislation may damage banking competition, warns industry body

Banking and Payments Federation Ireland chief also argues the bill puts sole legal responsibility onto the three banks operating in the Republic and excludes other providers of cash

Bank of Ireland, AIB and Permanent TSB are the only banks operating in the retail banking sector after the departure of KBC and Ulster Bank.

Banking representatives have warned that proposed legislation around the provision of cash could damage competitiveness within the sector.

The Banking and Payments Federation Ireland (BPFI) warned that the Access to Cash Bill will “almost certainly” drive fixed costs higher for retail banks which could increase the cost of everyday banking services for customers and make the market less attractive to new banking service entrants.

The bill will hold retail banks responsible for ensuring the majority of the population are no more than 10km from a service point where cash can be deposited as well as withdrawn and where in-person assistance is available.

BPFI chief executive Brian Hayes said the costs associated with the bill may be sustainable as banks continue to be profitable, but “given the cyclical nature of the sector, such costs could pose challenges into the future”. 

Bank of Ireland, AIB, and Permanent TSB are the only banks operating in the retail banking sector after the departure of KBC and Ulster Bank.

Bank of Ireland recently posted a record profits haul of €1.9bn before tax for 2023, as the lender cashed in on soaring European Central Bank interest rates, while paying out relatively low rates on its deposits, and tapping the full benefits of the departure of powerful rivals from the market.

What's your view on this issue?

You can tell us here

In a recent interview with the Irish Examiner, Central Bank governor Gabriel Makhlouf said “there are new entrants coming in, in a small scale” and it would be better to have more than three major domestic banks.

The comments from the BPFI were made while a finance committee discussed pre-legislative scrutiny of the bill.

Mr Hayes also argued that the bill puts sole legal responsibility onto the three remaining banks operating in the Republic and excludes other providers of cash including An Post, independent ATM deployers, and credit unions.

He said that, under the legislation, if any of these operators withdraw a service that gives access to cash, leading to a breach of the cash access criteria, “it will be the responsibility of the retail banks to remedy and replace this service, even in circumstances where this is not commercially viable”. 

Most businesses offer several payment methods to their customers, while there have been reports of some service providers including taxi drivers only accepting cash. 

However, earlier this year, Finance Minister Michael McGrath said cash use has declined in Ireland in recent years with around €13.5bn withdrawn from ATMs in 2022, down from just under €20bn before the pandemic.

The demand for ATM services still remains though, which was evident in 2022 when AIB decided to reverse its decision to remove cash services from 70 of its branches following backlash from customers and politicians.