The Central Bank has threatened to delay the launch of an alternative to bank current accounts by 11 credit unions, despite the initiative being announced yesterday.
The eleven credit unions revealed plans for a new Mastercard debit account to be launched in mid June. However the move looks likely to be delayed, after the Central Bank said the group would need approval for “an appropriate transaction account” in order to launch the debit card service.
The Central Bank said late yesterday that the product, and associated fees and charges, have not been approved, and that the provision of debit cards must be supported by an appropriate transaction account. While the regulator noted that such a full service payment account service has been recently developed by the Registry of Credit Unions, “to date no credit union has been approved”.
“We are currently progressing a number of applications. None of the credit unions mentioned have made applications to date,” the regulator said in a statement, adding that as of today it will commence “formally engaging bilaterally with the credit unions involved in relation to this announcement”.
Competition
Credit unions across the country are seeking to bring competition to the Irish current account market with the launch of the debit card. The card, which is planned to be made available to some 350,000 credit union members, would not be free, with a typical annual cost of upwards of €36.
Eleven credit unions have come together to form a not-for-profit organisation DCG Card Services, to manage the new debit Mastercard for their members. The card will allow contactless payment and supports fully electronically enabled accounts, online access and transaction facilities, and a mobile app for managing finances on the go. Roll-out of the card will begin in June.
The participating credit unions are: Gurranabraher, First South, Cork, Tullamore, Mullingar, Waterford, St Canice’s Kilkenny, Navan, Tralee, Health Services Staff, Mitchelstown and Ballinasloe.
"The full model is there now," said Fintan Ryan, chairperson of DCG Card Services and chief executive of Tralee Credit Union.
Cost
While a number of credit unions already offer ATM or debit cards, this initiative is believed to be the first launched by credit unions themselves. Mr Ryan said that cost was the main reason behind this.
“We control the pricing. We’re not for profit and we’re not looking to make anything out of the card. That’s the advantage of it,” he said.
Credit unions, if approved by the Central Bank, will be able to set the pricing structure themselves. In Tralee, the credit union will charge a quarterly fee of €1, plus transaction fees of €0.48 per ATM withdrawal and €0.15 for each point of sale transaction. Mr Ryan said they expect about 100 transactions a year, so possible annual costs could come to about €36, or more depending on the number of transactions.
Waterford Credit Union expects to charge a quarterly fee of €9, with 25 free transactions a quarter.
While this compares well with other banking charges, which may come to as much as €50 a quarter for example, it is less attractive perhaps than a bank which offers free banking.
“That’s what we’re being charged for it and we’re just passing it onto these customers,” Mr Ryan said of the charges.
Mr Ryan expects other credit unions to follow in due course and join the scheme.
