State ‘wasting millions’ on high credit card fees

Millions of euro of taxpayers’ monies have been wasted by government departments on exorbitant debit and credit card transaction fees despite warnings to change, a senior TD has revealed.

Chairperson of the influential Dáil Finance Committee, Ciarán Lynch, has welcomed plans to finally reform the system by 2016, but expressed concern that €6m a year of public money has been lost by not moving sooner on the issue.

Mr Lynch raised the alarm in January after exposing the fact departments have no limit for such commission fees, allowing card merchants to charge between 0.75% to 2.79% on transactions paid by the public for duties, services and levies.

The Cork TD has welcomed moves by the Public Expenditure Reform Department to introduce a uniform rate by April 2016, but the finance committee chairperson says an opportunity has been missed by not doing this already.

“By not acting sooner I am concerned that a chance to save millions of euro in these fees has been missed. But really this is a legacy issue of the last administration which should never have allowed this situation to occur in the first place.”

Mr Lynch believes the uniform rate to be brought in will be between 0.5% and 0.75% — well down on the 2.7% fees racked-up by the Jobs and Enterprise Department at present — and could save taxpayers at least €6m a year when imposed across Government.

The Transport Department has stated the Local Government Management Agency, which handles online motor tax payments, has extended its current arrangements for another 12 months but will review the situation next April.

Mr Lynch said that progress was welcome, but slow.

“We have been paying more than we needed to and we need to get a better deal on these transactions.

“Take the area of motor tax: people are paying €533m a year in total, and that is seeing some €3m being paid in merchant fees.

“There is scope there to reduce that and ensure that we get a better deal for the exchequer and for the citizen paying various charges and levies,” the TD said.

Mr Lynch warned that card rates of over 2% were far too high and hit out at a lack of uniform approach across departments.

The finance committee chairperson said some departments pass the charge onto customers while some do not, but the underlying problem is that the disparity of rates, ranging from 0.75% to nearly 3%, is too wide and significant savings for taxpayers can be made by adopting a more coherent approach.

Mr Lynch says he became aware of the problem when the Revenue Commissioners were called in before the finance committee to discuss the issue of credit card payments of the local property tax.

The TD said action needed to be taken due to the increasing use of electronic payment methods.