AIB's business customers hit by online price hike
Published 10/01/2014 | 02:30
BAILED-OUT AIB will hike the cost of banking for at least 43,000 businesses from March, the Irish Independent can reveal.
The bank is increasing the cost of its online business banking product, known as an IBB account.
Some 43,000 businesses used these type of accounts as of last June, and almost all will be affected. The price rise should generate around €2.15m in extra revenue for the bank.
The cost of a basic IBB account will rise 25pc, to €250 a year from €200.
More sophisticated versions will also be affected. For businesses with two entities registered under one bank account, the annual price rises to €400 from €350. Businesses with three entities registered under one account will be charged €500, up from €450.
The price hike was approved by the Central Bank. The first quarterly charge with new rates will be levied in June.
"It's a real blow -- a 25pc increase with no warning," said Noel Conway, a supervisor at community employment project Ardmore Grange United.
His organisation, which employs 22 people, has held an AIB online business banking account for a year and a half.
"The Department of Social Protection, which funds us, required us to switch over to online banking. So we have no choice but to hold an internet banking account, but it seems they can charge us whatever they like.
"The bank will now charge us more even though we have reduced its workload -- we do all the work when it comes to internet banking, they don't have to provide a physical branch or tellers.
"For small businesses like us it makes a real difference -- it's €50 less a year we have available to us. Funding for our projects was already cut by 35pc last year, we don't need this too."
AIB said the price increase was necessary "in order to continue to develop and invest in electronic channels for customers".
It added that customers who are eligible for start-up status, as well as those with young farmer accounts, are entitled to a free subscription to IBB for two years.
Informing its customers of the price changes, the bank said businesses are entitled to cancel their accounts rather than pay the new fees.
Mark Fielding, chief executive of small business body ISME, said the price hike was just the latest in a series of increases to banking costs for businesses.
"On the one hand businesses are being pushed to switch over to electronic payments and stop dealing in cash and cheques -- and yet the banks are turning around and making it more expensive to bank electronically.
"I'm surprised that the Central Bank approved a 25pc price increase in one blow, too."
The cost of doing business, he said, is the second most pressing concern for small and medium enterprises at present.
When contacted, a spokesperson from Bank of Ireland did not rule out any price hikes to business banking in 2014.
A basic online business banking account with Bank of Ireland starts at €180 a year, while its more sophisticated product, which allows large same-day online transfers, starts at €840 a year.
Ulster Bank charges €20 a year for its basic business account product, which includes free online banking, though there are further charges per transaction and a more expensive option available for larger corporates. Transaction charges include a €25 fee for statements and reports.