Alex White (Dublin South, Labour) | Oireachtas source

I am responding to this Topical Issue debate on behalf of my colleague, the Minister for Social Protection, Deputy Burton.

The payment strategy being considered by the Government has the goal of reducing significantly the level at which welfare payments are made in cash. This goal is shared by the national payments plan and the roll-out of the standard bank account. Reflecting its central role in the delivery of cash transactions, this will in particular impact on An Post, notably in the context of the delivery of welfare payments.

The payment strategy is a multi-phase strategy to be achieved over a number of years. The first phase is progressing, with the Minister being able to announce recently that An Post had been selected as the preferred bidder for the cash payments service, subject to contract agreement. This will ensure a cash service will be available at local post offices for up to six years while other aspects of the strategy are progressing. The second phase of the strategy will be the public procurement competition for a new electronic payment solution to commence later this year. This e-payment solution will supplement existing direct payment by electronic funds transfer, EFT, into customer accounts in financial institutions while strengthening the Department's approaches to fraud and control.

The Department must look for opportunities to provide better and more secure customer service while continuing to serve the most vulnerable in our society. In building on the visible movement of welfare customer towards EFT, the strategy sets out a roadmap for progressive movement towards the increased use of electronic payment channels. In support of national competitiveness, cost containment and cost efficiencies in the payments process are crucial in light of budget constraints and the Government's policy to protect the value of social welfare payments.

Analysis undertaken for the payment strategy indicates a significant variation in the cost of different payment methods. It costs six and a half times more to issue a payment to a customer in cash than it does by EFT. The movement of cash also has societal costs and imposes security risks on customers and staff alike who handle, distribute and receive these moneys. Cash limits the scope for customers to avail of cheaper prices online and curtails financial inclusion of customers. Cash also perpetuates transactions in the shadow economy.

Undeniably, a loss in the current revenue stream from social welfare payments would impact on An Post. The Government understands that in anticipation of the increasing use of EFT generally, An Post has prepared and implemented a strategy that 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 AIB and Danske Bank. It is understood that agreement has also been reached with Aviva on transferring the Aviva branch network to An Post. New lines of business have been generated, such as foreign exchange where An Post now holds 30% of the domestic foreign exchange business. Post offices were also used as a payment channel for the property tax.

The Minister has asked me to assure the Deputy that welfare customers will be assisted in a period of managed conversion to electronic payments so as to limit the risk of anxiety or stress for customers. This will also benefit the board of An Post in devising and implementing suitable strategic business options for the delivery of its services and the maintenance of its network.

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