National Payments Strategy: Department of Finance consults on its plans
The Department of Finance launched its National Payments Strategy: Public Consultation today (12 December 2023). Its November 2022 Retail Banking Review Report had recommended the development of a National Payments Strategy (NPS), to be completed in 2024, and Terms of Reference for the NPS were published in June 2023 in advance of the consultation.
Against the backdrop of an increasingly digital payments landscape, the consultation suggests that the NPS set a roadmap to 2030 for the evolution of the payments system in Ireland. Balancing four key pillars (access and choice, security and resilience, innovation and inclusion, and sustainability and efficiency), the Department wants the NPS to ensure that Ireland’s payment system keeps pace with innovation, while supporting cash access and cash acceptance.
The proposed 2030 date is designed to align the development of Ireland’s payments landscape with the timetable for key EU payments-related initiatives such as:
- Proposals to revise the Payment Services Directive by introducing a new regulation and directive focusing on authorised push payment (APP) fraud. The current EU payment services framework, through strong customer authentication (SCA) measures, focused on unauthorised payment fraud, but APP hasn’t featured on the EU legislative priority list until recently.
- As part of the new payment services package, the Commission also proposed improvements to the open banking framework. In Ireland, a lack of data collection on usage of open banking services has hindered the Department’s ability to judge how best to promote its use.
- Proposals for a digital euro. The ECB’s Governing Council will make the final call on whether to issue a digital euro (it is in the second phase of its workplan at the moment), and the Commission has proposed a legislative package that would underpin any decision by the ECB to proceed.
- The proposal on the legal tender of euro banknotes and coins.
- The upcoming regulation on instant euro credit transfers – Ireland’s financial infrastructure is behind the EU average as regards instant credit transfers, but that will need to change quickly once the new (directly effective) regulation comes into force. The consultation sounds a note of concern regarding whether the new regulation will, of itself, suffice to ensure a full roll-out of instant payments capability in Ireland.
The consultation questions are wide-ranging, seeking views on the 2030 timeline, choice of payment methods, challenges to rolling-out instant payments and open banking, addressing payment fraud, crypto-assets as a form of payment, and data collection challenges.
Interestingly, by volume, 60% of online transactions in Ireland are carried out by card, but 54% of point-of-sale transactions are carried out using cash – these statistics (coupled with the Retail Banking Review Report) explain the greater emphasis in the consultation on ensuring continued cash access than was the case with the 2013 National Payments Plan (where the overriding aim was the promotion of electronic payments).
In light of that, the consultation poses questions on cash access and acceptance. The Government is drafting Access to Cash legislation at the moment (with criteria based (initially) on June 2023 cash usage statistics). The NPS will need to consider how future cash usage levels could impact access, and whether adjustments to those criteria will be needed. On cash acceptance, views are sought on whether the Minister should be empowered to require certain firms or sectors to accept cash (note that the Minister asked Government colleagues to ask public bodies to maintain existing cash payment methods for the time being in September 2023).
The consultation closes on 14 February 2024. The NPS is expected later in 2024.