Jim O'Keeffe (Cork South West, Fine Gael)
Link to this: Individually | In context

Question 139: To ask the Tánaiste and Minister for Finance if he is satisfied with the situation whereby personal cheques can take ten working days for clearance by the banks with the consequence that such cheques are no longer accepted by some payees including at least one Government Department; and if he will have discussions with the banks with a view to ensuring a more efficient system. [2284/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I should explain that the Irish clearing system is a private institution, which operates under the general umbrella of the Irish Payment Services Organisation. I am informed that the clearing cycle for a cheque should in normal circumstances take no more than three business days, with the bar on returning a cheque unpaid being set at five business days. This might occur where, say there are insufficient funds in the payer's bank account. 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.

The timeframe is also dependent on the bank or financial institution being a member of the Irish Paper Clearing Company (IPCC) Ltd. The Irish Paper Clearing Company Limited (IPCC) is responsible for the clearing and settlement of all paper payment instruments in Ireland and is overseen by the Central Bank and Financial Services Authority of Ireland (CBFSAI). 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.

By way of concluding, the Deputy should note that cheque usage in Ireland has stabilised at 130 million, which represents a decline in the overall proportion of cheques as a means of payment as use of electronic methods has increased noticeably. As more efficient electronic payments systems become more popular, it can be expected that cheque usage will further decline in relative terms.

Modern commercial financial and retail transactions will increasingly be electronically based for reason of efficiency and security. This will benefit not just businesses but also the ordinary person in the street. I have contributed to the delivery of this desirable policy objective through the reduction of the stamp duty charge on financial cards in Budget 2008.