Payments system entry 'transparent'

The access criteria for banks wishing to join the Irish payments system are "transparent and non-discriminatory", the chairman of Irish Payment Systems Organisation (IPSO), Mr Stewart MacKinnon has said.

Mr MacKinnon told The Irish Times that none of the five payments clearing companies which come under the umbrella of IPSO have ever refused entry to a bank which applied for membership and met the criteria.

He rejected a recent claim by the Director of Consumer Affairs, Ms Carmel Foley, that IPSO operated as a "barrier to entry" to the retail banking system.

The entry criteria for banks wishing to join the payments system are: to be a credit institution supervised by an EU or G10 central bank; to have a settlement account with the Central Bank; to be capable of complying with the operational and technical requirements of the clearing company; and to have a business case for joining.

The five clearing companies which come under the IPSO umbrella are: the Irish Paper Debit Clearing Co Ltd; the Irish Paper Credit Clearing Co Ltd; the Irish Retail Electronic Payments Clearing Co Ltd (IRECC); Irish Real Time Interbank Settlement Co Ltd (IRIS); and Laser Card Services Ltd.

The boards of all the companies include representatives of the Central Bank and the member banks. Decisions are almost invariably by consensus, Mr MacKinnon said.

Overall the IPSO structure helps facilitate the transfer of billions of pounds daily, nationally and internationally, by way of electronic transfers, cheques, laser transactions and credit transfers.

IPSO has nine shareholders. They are: AIB; Bank of Ireland; NIB; Ulster Bank; Permanent/TSB; First Active; the EBS; Bank Nationale de Paris; and the Central Bank.

Mr MacKinnion said the membership of IRIS was evidence there was no "closed shop" in Irish banking.

There are 23 members of the company, which is involved with clearing large value payments domestically and internationally. About £22.86 billion (€18 billion) is dealt with daily and the transfers involve "real time settlement".

With the other IPSO companies the various banks settle between each other at the end of each day by way of credits and debits to their settlement accounts with the Central Bank.

IRECC, which deals with small value electronic transfers, has six members. These are the five Irish clearing banks plus BNP, which acts for about 9 other foreign banks. The company is concerned with the direct debit of payments.

The debit clearing company dealings with cheques and the credit clearing company deals with credit transfers.

The various members involved in the cheque clearing system have to undertake to have cheques ready for transport at particular times each day, so that the constant collection, transport and delivery system can operate smoothly. If anything goes wrong it can have major repercussions for business and individuals.

In the UK clearing house, BACS Ltd, where Mr MacKinnion worked perviously, the collapse of the telephone network brought the UK to a virtual standstill, he said.

Overall, IPSO and the banks would like to see people moving away from the use of cash and cheques, and towards increased use of electronic transfers.

It will not become straightforward to pay for something in Europe next year with an Irish euro cheque because European systems are arranged nationally and differ from one another.