Dáil Éireann Debate, Tuesday - 25 February 2014
371. Deputy Seán Ó Fearghaíl asked the Minister for Social Protection if she will confirm that social welfare recipients will still be able to collect a manual payment at their post office and not be forced to accept an electronic payment (details supplied); and if she will make a statement on the matter. [9757/14]
View answer376. Deputy Brendan Griffin asked the Minister for Social Protection if her attention has been drawn to the concerns in the post office network about the proposed changes in her Department's payment methods; her plans regarding same; and if she will make a statement on the matter. [8998/14]
View answer382. Deputy Michael Healy-Rae asked the Minister for Social Protection the reason her Department is bypassing post offices by driving more social welfare recipients over to electronic payments through the banking system; if she will give a commitment that her Department will cease what it is doing and encourage recipients to use the local post offices; and if she will make a statement on the matter. [9120/14]
View answerI propose to take Questions Nos. 371, 376 and 382 together.
At present, welfare clients who are paid through the post office network are paid in cash. It gives rise to a distribution of some €9.5 billion in cash annually. Some nine hundred thousand (900,000) clients of the Department are paid in this manner, accounting for some fifty per cent (50%) of all welfare payments. On foot of a new contract signed by me a little more than two months ago, the contract for these services will generate sums in excess of €50 million in revenue to An Post in the coming year. This contract is quite clearly substantial in terms of reach, value and impact.
However, cash payments are an inherently expensive means of paying clients. It costs the Department six and a half times more to issue a payment to a customer in cash than it does by EFT. Almost sixteen per cent (16%) of the Department’s budget for administration is being spent on the costs associated with delivering payments to welfare clients. This approach requires ongoing review.
Consumer behaviour now shows a very high movement towards online and electronic payments. Electronic point-of-sale transactions increased by approximately 20% year on year in 2013. The number of point-of-sale terminals in now heading towards 60,000 with approximately one in six of these offering “contactless” payment facilities. Last year some 300 million transactions were made with payment cards. Some 21 million journeys were made using Leap cards in 2013. Consumers generally, including the vast majority of our clients, are increasingly adept and willing to adopt electronic payment approaches as a matter of convenience. In keeping with these behavioural shifts, my Department must look for opportunities to keep abreast of societal changes, provide better and more secure customer service, while also continuing to serve those who are more vulnerable in our society.
Many of our customers while having a bank account, credit union account or other account in a financial institution which can receive electronic payments are still being paid in cash. This is a costly choice for us to support, particularly when budgets at a national level remain so constrained.
Accordingly, my Department has developed a Payments Strategy. The overall objective of this Strategy, which was approved by the Government last year, is to modernise the Department’s payment delivery approach by delivering payments to clients electronically and in a way that facilitates onward e-payments by the client. In recognising this movement towards the electronic handling of payments, the Strategy lays out a road map for a progressive movement towards increased use of electronic channels in the disbursement of welfare payments. This road map adopts a phased approach to implementation. The progression to electronic payments is a critical element of the wider National Payments Plan aimed at removing the very high levels of cash usage in the Irish economy which will contribute to improved national competitiveness. The Strategy supports wider Government objectives for increased efficiency in public services and better services to customers that suit changing behaviours, while also increasing levels of financial inclusion among the Department’s clients. I must reiterate however that I have consistently confirmed that no customer will be left without a payment simply by virtue of not being able to receive it electronically.
I am conscious of the important role of the post office around the country, notably the extent to which it is now a one stop shop where people can pay bills, purchase mobile phone top ups, use the passport application facility, pay local property tax or garda fines, and carry out a range of banking and other financial services. The Government has stated its commitment to maintaining the post office network in the Programme for Government. However, I am also aware that the business risks facing An Post cannot be placed solely on the door step of proposed changes to welfare payments. The Deputies may be interested to know that over the past ten years, the number of post office outlets countrywide has fallen by one third. Over this same period, mostly due to the downturn experienced in the economy generally, the volume of welfare payments routed through the post offices rose by seven per cent (7%). This increased transaction volume has derived significant additional revenues to An Post and the postmasters. And still, despite increased transaction numbers, the post offices numbers fell to levels which are now about two thirds of what they were a decade ago.
Undeniably a loss in the current revenue stream from social welfare payments would impact on An Post. I understand that in anticipation of the increasing use of EFT generally, An Post has prepared and implemented a strategy which aims to address the reality of increased use of electronic payment methods within the economy. On the revenue side, An Post has made significant progress in developing new commercial opportunities with other financial and payments institutions, notably with AIB and Aviva. New lines of business have been generated such as foreign exchange where An Post now holds 30% of the domestic foreign exchange business.
I know that my colleague Minister Rabbitte is working closely with the Board of An Post in identifying new retail business opportunities for their network. He has consistently repeated his support for the continuing modernisation of post office services and has again just last week spoken of the need for them to compete and win new business that brings benefits to postmasters and communities locally. For my part, I was very happy to back that support with the signing of the contract with An Post in December last for a period of two years with the potential to extend the contractual arrangement for a further four years thereafter. It is important that An Post and postmasters alike replicate this success and continue to work together to maintain financial services in local communities.
