I am not aware of any irregularities regarding the clearing time for cheques in Ireland. I should explain that the clearing system in Ireland is governed by private arrangements between the participating institutions, operating under the aegis of the Irish Payment Services Organisation (IPSO). The clearing cycle for a cheque should in normal circumstances take no more than three business days, with cheques that are unpaid generally being returned within 5 working days. This might occur where there are insufficient funds in the payer's bank account. Presentation of a cheque by a payee to his or her bank occurs on Day 1 of the clearing cycle. The payee will commence receiving interest from Day 2, which is the same day settlement takes place between the payee's bank and the drawer's bank at the Central Bank. The drawer's bank account is debited on Day 2 or Day 3 of the cycle. The clearing cycle may be quicker (in some cases instantaneous) if a cheque is both drawn on and collected on the same bank.
There is also provision for special presentation of a cheque for immediate payment, which is only available in the Dublin area for cheques up to a value of €625,000 and where the payee presents the cheque before 3 p.m. in the nominated branch of the bank.
This timeframe is also dependent on the bank or financial institution being a member of the Irish Paper Clearing Company (IPCC) Ltd. The IPCC is responsible for the clearing and settlement of all paper payment instruments in Ireland. Any bank or financial institution outside of this framework may have a longer cheque clearance cycle. A list of members is available directly from IPSO at www.ipso.ie.
As to when any particular bank will permit a customer to draw against lodged cheques, this is an individual bank decision based on its own risk management and credit control arrangements. I would expect that all banks would inform their customers of the relevant terms and conditions. If the Deputy wishes to provide me with further information on this matter, I can arrange for enquiries to be made.
I think it is also important to point out that this question also highlights the disadvantages of the continued high usage of cheques as a method of payment within the commercial sector in Ireland.
It might be noted that electronic payment transactions have the potential to achieve significant savings for individual businesses; in particular electronic payments processing and invoice presentation can realise significant administrative cost savings, improved efficiency and improvements in the quality of customer service. This has the potential to benefit not just businesses but also their customers.
Government policy is to promote the increased use of electronic payments throughout our economy. In promoting this policy objective, I have reduced stamp duty on combined ATM cards from €10 to €5 in Budget 2009, building upon changes in the previous year's Budget. I also increased stamp duty on cheques, from 30 cent to 50 cent per cheque, to further disincentivise cheque usage.
I have recently made regulations (S.I. 383 of 2009) to transpose the EU Payment Services Directive (Directive 2007/64/EC), which, inter alia, establishes rules on the maximum time for the execution of both paper-initiated and electronic payments. These regulations will take effect from 1 November 2009.
I have also previously indicated the need to establish new governance arrangements to further promote the development of electronic payments in our economy, and I am currently making preparations for the establishment of a task force comprising key representatives of the main stakeholders to direct the preparation and implementation of a national payments implementation plan over a two year period.