First-ever ATM tax replacing debit card stamp duty
Published 14/10/2015 | 02:30
A controversial fee for taking out money from an ATM with a debit card has been introduced.
Instead of paying a flat rate of stamp duty, consumers will now be slapped with a 12c charge every time they withdraw cash from an ATM using a debit card.
The rule will take effect on January 1. It is the first time the Government has levied a tax on ATM withdrawals.
For now, the tax is capped at a maximum of €2.50 for ATM cards and €5 for combination ATM / debit cards - the same as the stamp duty on those cards.
Consumers can avoid the tax altogether by paying for purchases in-store with their debit card rather than taking out money at a hole-in-the-wall.
The tax is completely separate from banks' own charges for ATM and debit card use; many banks impose their own fees for providing these services.
The policy is an attempt by the Government to reduce the amount of cash changing hands in Ireland. We use twice as much cash as the EU average.
It is good news for retailers, since cash costs them more to process than card payments.
However, it could have the unintended consequence of encouraging more people to ask for 'cash-back' from shops when paying by debit card.
The new rule applies only to debit and ATM cards. Stamp duty on credit cards remains the same at €30. It will still be levied in one single charge unrelated to ATM withdrawals.
Finance Minister Michael Noonan also announced two other debit card-related measures yesterday, which he said should bring an end to shops asking for minimum payments for card use.
The first was an increase to the spending limit on contactless debit cards, which allow shoppers to pay for goods by simply swiping their card over a terminal. The spending limit on contactless cards will rise from €15 to €30 on October 31. The change is being led by card companies Visa and Mastercard, and did not require any change to Government policy, it is understood.
The other measure announced was a new limit on how much banks can charge retailers for accepting debit card payments from customers.
"Retailers in Ireland currently face excessive fees for accepting card payments," the minister said.
Known as 'interchange' fees, these are imposed by the banks who issue cards. They will now be capped at a maximum of 0.01pc of any transaction paid for with a debit card.
The maximum fee which banks can charge retailers for credit card transactions was not changed, but it was recently reduced by the EU to 0.03pc of the transaction. The reductions should save retailers an estimated €36m in fees per year, Mr Noonan said.
It was important that the savings were passed on to consumers, he added when delivering his Budget speech. The regime will be monitored closely to ensure this. The rule will take effect on December 9, before the end of the busy Christmas shopping period.