Michael McCarthy (Cork South West, Labour)
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97. To ask the Minister for Social Protection if she will confirm if it is compulsory that social welfare recipients must now receive payments via bank transfer; the reason for same; if there are circumstances in which a person may have payments via An Post; and if she will make a statement on the matter. [48577/13]

Joan Burton (Dublin West, Labour)
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The Department of Social Protection is a key player in the payment services sector in Ireland with over 87 million payments issued to customers in 2012. The current range of payment options includes payment to an account in a bank, building society or certain credit unions that have been authorised by the banking and credit union regulators, payment at a local post office or payment by cheque.

The Department has undertaken a root and branch examination of its payment processes, methods and approaches. This resulted in the preparation of a Payment Strategy which was approved by Government and will be published before the end of the year. The aim of the Payment Strategy is to modernise the Department’s payment delivery approach by delivering payments to customers electronically and in a way that facilitates direct debits, ATM withdrawal, point of sale deductions and online payments by customers. The Strategy has the goal of reducing significantly the level at which welfare payments are made in cash. At present, 50% of all social welfare payments are disbursed in cash. This amounted to approximately €9.5 billion distributed over 43.7 million transactions last year. The analysis undertaken for the Payment Strategy indicates the very significant variation in the cost of different payment methods. The cost of issuing a welfare payment in cash is six and a half times more than paying to an account in a financial institution and three times more than issuing a payment by cheque rather than EFT.

The Payment Strategy sets out a multi-phased approach to be implemented over five years. The first phase has commenced with contract negotiations underway with An Post to maintain existing over the counter cash services. This will ensure that customers can continue to receive their payments in cash at local post offices for the foreseeable future. It provides an assurance in the continuity of cash payments to customers for up to six years while other aspects of the Strategy are progressing.

The next phase of the Strategy will be the progressive migration of customers to Electronic Funds Transfer (EFT) payments. The move to electronic payments for social welfare transactions is a trend that has been apparent for some time, and we have seen that most new social welfare customers (aside from jobseekers) are choosing EFT as their preferred method of payment. Last year four out of every five new customers claiming child benefit elected to be paid into an account. The Department does not intend migrating higher risk customers to an electronic payment until appropriate and robust measures are defined and fully implemented to mitigate any potential for increased risk of fraud within an electronic payments environment.

Moving to electronic payments will require a significant effort to assist and support suitable customers over the five year period. The Department will work energetically to help customers and their representatives in the transition period. The Deputy can, however, be assured that customers will not be refused a payment simply because they cannot receive it electronically.