Ireland will only embrace e-payments if its Government sets an example and changes the nature of state business.
In the lead up to the recent elections, Fine Gael’s Digital Island manifesto included the creation of a national E-day – 1 January 2016 – to make government services online only by that date. The aim was to approach the target date in the same way as the euro changeover.
Since the Government is the biggest acquirer of goods and services in the country, perhaps a closer date needs to be set for transforming how it conducts its affairs. One such move would be to cancel the use of cheques and move in the direction of electronic payments for staff members, suppliers and indeed anyone who receives payment of any kind from the State. In the UK, the government there wants to wind down the cheque system by 2018, for example.
One suggestion by National Irish Bank’s chief economist Ronnie O’Toole is to declare a national E-Day by next year. By that stage, the Government and state agencies should then stop increasing or issuing cheques, increase stamp duty on cheques and abolish the Cheque Guarantee Scheme. O’Toole believes annual savings of €1bn in the Irish economy would be achieved by switching to electronic systems.
The 9th Benchmark Measurement of European eGovernment Services study pointed to a number of Irish Government websites as examples of best practice:
■ Access to Revenue Commissioners Services and Information
■ Electronic registration of transactions affecting the Land Register in Ireland
■ Online facility to deal with the surge in queries around unemployment and a range of associated issues caused by the economic downturn
■ Collection of charges for non-principal private residences
■ The ‘Customer Charter Initiative’, four-step cycle of consultation, commitment, evaluation and reporting.
Paul Rohan, head of product management, Global Treasury Services, AIB Capital Markets, believes it is fundamental that Ireland eventually moves from cheque-based payments to electronic payments, but not just because electronic payments seem more modern and convenient.
“Certainty is a factor. For example, the rights and obligations of various parties when a debt is settled by cheque have origins that go back as far as the Bills of Exchange Act of 1882. In contrast, some of the precise legal processes for EU banks to remedy the situation for customers when systems problems delay or disrupt electronic payments were only formalised in November 2009.
“Confidence and familiarity are also factors. It is an extreme example, but when people are nervous about banking systems, the price of gold tends to surge rather than a surge in holdings of some of the modern ‘net currencies’ that are emerging.
“Ireland’s policy on payment instruments should be driven by the country’s overall economic policies. Ireland’s open economy depends heavily on globalised businesses and easy access to the single EU market. Ireland should purposefully move to electronic payments because the EU is moving to a common standard under the Single European Payments Area programme.
I asked Rohan about the kind of savings he thinks the Government would achieve and the impact on the economy if the country embraced e-payments.
“The real inefficiency in the economy at the moment is driven by the diversity in payments methods. For example, in an Irish business park you could typically find a US multinational, an Irish Government agency and an Irish indigenous import/distribution firm. The US multinational is efficiently using invoice and payee data stored in its ERP system to generate a bulk electronic file of multi-currency payments to upload automatically to its bank. The Irish Government agency is paying its employees their salaries electronically but accepting payments from Irish citizens by cheque. The Irish indigenous import/distribution firm is paying Irish suppliers electronically in euro but paying suppliers in the UK by sterling cheque. This number of unnecessarily diverse payment methods increases the amount of employee training, bank account reconciliation, banking systems, risk management and payments support services required in the economy.”
Rohan suggests a purposeful move to a standard suite of electronic payments, for both debits and credits, euro and non-euro, will reduce the overheads ultimately shared by all public and private enterprises.
“Ireland should focus on this standardisation of methods rather than average costs per payment. Ultimately, your average cost per payment is unavoidably dictated by the size of your national population. In using electronic payments, the German economy will gain scale efficiencies from 80m people, while Ireland spreads its infrastructure costs across 4.5m people,” Rohan said.
Ireland and e-government
While Ireland clearly has its work to do in moving to e-payments, the country is still a top performer in the e-government stakes. A benchmark of EU e-government practices ranked Ireland above the EU average in a number of areas, such as procurement, online availability and e-services to citizens.
The European Commission released the 9th Benchmark Measurement of European eGovernment Services, carried out by Capgemini Group, Rand Europe IDC and the Danish Technological Institute.
With 100pc, Ireland’s full online availability is above the EU average of 82pc. In the full online availability ranking, Ireland now ranks first out of the 32 measured countries.
The online sophistication of public services reaches 100pc, of which sophistication for business services stands at 100pc (compared to 94pc for the EU27+) and sophistication for citizen services is also at 100pc (compared to 87pc for the EU27+).
Ireland’s e-services scored 87pc on usability and 72pc on user satisfaction monitoring as compared to the EU averages of 79pc and 80pc respectively.
The study pointed to the fact that Ireland has a centralised approach to public procurement activity, with the establishment of a national procurement service and a national e-tendering platform.
Contracting authorities have to use etenders.gov.ie and electronically publish procurement opportunities more than €10,000. It is also mandatory for public authorities to use the electronic means for all payments. Ireland is a top performer for both visibility and pre-award indicators, the study said.
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