Credit unions' plan for new debit card hits Central Bank roadblock
Credit unions have vowed to press ahead with plans to challenge the banks with a new day-to-day payments accounts and a debit card - despite not having the approval of the Central Bank.
Eleven credit unions, representing 350,000 members, have come together to offer an electronic payments account with a MasterCard debit card from this month. But the Central Bank warned that the product and its fees had not been granted approval.
A spokesman for the Central Bank said debit card services must be supported by an appropriate transaction account. But it said it would engage with the credit unions involved to resolve the issue.
The credit unions insist they have kept the regulator fully informed of their plans and that the card launch will go ahead.
There was surprise among financial experts when details of the new credit union debit card account emerged, showing it to be as expensive as those offered by the banks.
Each of the 11 credit unions will set its own charges, but the average fee will be 40c for making cash withdrawals through an ATM. There will also be a 15c fee for point-of-sale transactions and the same fee for contactless payments.
Most banks do not currently charge for contactless transactions. Bank of Ireland charges 25c for ATM withdrawals, but this can be avoided if €3,000 is kept in the account. It has a €5 quarterly fee that cannot be avoided.
Some credit unions are set to charge more than this.
In Tralee, the credit union will charge a quarterly fee of €1, plus transaction fees of 48c per ATM transaction. Waterford Credit Union expects to charge a quarterly maintenance fee of €9, with 25 free transactions a quarter.
The 11 credit unions have come together to form a not-for-profit organisation, DCG Card Services, to manage the new debit MasterCard for their members.
Fintan Ryan, the chairperson of DCG and chief executive of Tralee Credit Union, defended the pricing structure for the new payments and debit card account, saying: "We are not proposing to be cheaper than anyone else. There will be no charge for direct debits or online transactions.
"We won't be the cheapest in the market, but we will be upfront on our charges and there will be no gimmicks like minimum balances or having to make a set number of transactions."
Mr Ryan insisted that the credit unions would still be competitive compared with the banks and that the statement from the Central Bank, saying it has not approved the move, would not delay the launch of the debit card account.
A further 10 to 12 credit unions were ready to join the scheme in weeks, he said.
Participating credit unions include Cork's Gurranabraher and First South; Offaly's Tullamore; Mullingar, Co Westmeath; Waterford; St Canice's in Kilkenny; Navan, Co Meath; Tralee in Kerry; Health Services Staff; Mitchelstown in Cork; and Ballinasloe in Galway.
A number of other credit unions already offer debit cards and banking-type facilities.
The latest move comes after Permanent TSB launched a new current account, offering some money back when customers spend on their debit card.