IPSO Chief Executive Pat McLoughlin's Presentation to the Financial Services Club, Ireland, 25th February 2009. This is part of blog entry that can be found at: http://thefinanser.co.uk/fsclub/2009/03/in-ireland-its-cash-or-cheques-only.html

1. Irish Payment Services Organisation Ltd.
How Europe's Infrastructural Changes
Impact the Irish Economy and Banks
Royal Dublin Society, Ballsbridge
February 25th 2009
Pat McLoughlin
Chief Executive
Chief Executive
www.ipso.ie 1

2. Topics to be Covered
Topics to be Covered
Examine Our Payments Structure
Examine Our Payments Structure
Compare With Europe
Compare With Europe
Outline Difficulties for SEPA
Outline Difficulties for SEPA
Outline Difficulties for Ireland
Outline Difficulties for Ireland
National Payments Plan
National Payments Plan
www.ipso.ie 2

3. SEPA
4300+ Banks Signed Up for SCT
4300+ Banks Signed Up for SCT
SEPA DD Due November 09
SEPA DD Due November ‘09
Cheques and Cash out of Scope
Cheques and Cash out of Scope
PSD Due November 09
PSD Due November ‘09
Self – regulation at present / reachability
Self regulation at present / reachability
www.ipso.ie 3

4. Payment Statistics
Payment Statistics ‐ Ireland
www.ipso.ie 4

5. Cheques/Other Paper Instruments
Volumes
Vl
Number of Paper‐Based Payments in Ireland
p y
140
129.9 129.9
128.8
124.6
124.2
Volume in Millions
s
120
100
Annual V
80
6054.9
49.5 47.4
45.3
43.1
40
2003 2004 2005 2006 2007
Cheques / Paper Debits Paper Credits
www.ipso.ie 5
Source: IPSO

6. Cheques/Other Paper Instruments ‐ Values
Cheques/Other Paper Instruments
1,000
975.90
975 90
Value of Paper‐Based Payments in Ireland 948.70
885.00
900
845.00 872.00
alue in €Billions
829.00
800
756.00
723.00
Annual Va
700 699.00
660.00
600
Cheques / Paper Debits Paper Credits
500
2003 2004 2005 2006 2007
www.ipso.ie 6
Source: IPSO

7. Card Payments
Card Payments ‐ Volumes
300
Number of Card Payments in Ireland
250 251.0
204.0
olume in Millions
200
174.1
174.0
150 146.0
137.0
137 0
Annual Vo
114.0
106.0 105.0
100 99.0
94.6
86.0
79.5
68.0
60.0
60 0
50
Credit Cards Debit Cards Total
0
2003 2004 2005 2006 2007
www.ipso.ie 7
Source: IPSO

8. Card Payments
Card Payments ‐ Values
25
22.6
Value of Card Payments in Ireland
20
19.3
15.9
15
€ Billions
13.8 13.4
12.6
11.2
10.7
10
9.5 9.2
7.5
6.7
5.2
5
4.3
3.7
37
0
2003 2004 2005 2006 2007
Credit Cards Debit Cards Total
www.ipso.ie 8
Source: IPSO

9. ATM Cash Figures
ATM Cash Figures
€6,544 €30
€6,600
€28.4
€6,400
€24.9
€24.1 €25
€22.8
€6,200
€6 200€22.0
€22.6
€6,000 €20
€19.3
€5,807
€5,858
€5,800
€15
€15.9
€5,616
€5,580
€5,600
€13.8
€13 8
€11.2
€5,400 €10
2003 2004 2005 2006 2007
Cash Per Capita Cash (€ billions) Cards (€ billions)
www.ipso.ie 9
Source: IPSO

10. Payment Statistics
Payment Statistics ‐ EU
www.ipso.ie 10

11. €0
€7 000
€1,000
€2,000
€3,000
€4,000
€5,000
€6,000
€7,000
Denmark €526
Bulgaria €586
Romania €729
Cyprus €1,368
Slovakia €1,407
Source: ECB Payment Statistics November 2008
Poland €1,413
L
Luxembourg €1,538
Italy €1,538
2007
Hungary €1,544
France €1,676
Cze
ech Republic €1,835
5
ATM Cash Per Capita
Lithuania €1,93
31
Austria €2,1
151
Latvia €2,
,215
www.ipso.ie
Slovenia €2,
,221
Malta €2
2,299
Spain €2,389
EU total €2,579
Portugal €2,599
Eur
ro area total €2,652
Estonia €2,806
Sweden €2,930
EU ATM Cash per Capita
EU ATM Cash per Capita
Finland €3,112
Belgium €3,212
N
Netherlands €3,372
Germany €3,737
Greece €3,937
7
Unite
ed Kingdom €4
4,471
Ireland €6,544
11

12. ATM Cash Figures
ATM Cash Figures
Ireland v EU ‐ Annual ATM Cash per Capita
£6,400
€6,544
£5,900
€5,858
€5,843
£5,400 €5,580 €5,518
£4,900
£4,400
£3,900
£3,400
€2,730
£2,900 €2,634 €2,579
€2,518 €2,443
£2,400
2003 2004 2005 2006 2007
Ireland EU
www.ipso.ie 12
Source: ECB Payment Statistics November 2008 and IPSO

13. 0
10
20
30
40
50
60
0
Bulgaria
0
Hungary
0
Netherlands
0
Poland
0
Estonia
0
Latvia
0
Slovakia
Source: ECB Payment Statistics November 2008
0
C
Czech Republic
0
Lithuania
0
Sweden
0
Finland
0
Slovenia
0
Austria
1
Luxembourg
1
Romania
www.ipso.ie
1
Germany
1
Belgium
2
Denmark
3
Cheques per Capita ‐ 2007
Greece
3
Spain
7
Italy
EU Cheque Volumes
EU Cheque Volumes
13
EU total
15
E
Euro area total
17
Portugal
26
Un
nited Kingdom
29
Ireland
32
Malta
33
Cyprus
57
France
13

14. €0
€50,000
€100,000
€150,000
€200,000
€250,000
Bulgaria €0
Hungary €0
Netherlands €0
Poland €2
Estonia €7
Slovakia €11
Source: ECB Payment Statistics November 2008
Latvia €13
Slovenia €64
Czech Republic €131
Lithuania €266
Sweden €703
Romania €1,044
Luxembourg €1,063
Austria €2,127
www.ipso.ie
Germany €4,849
Finland €5,671
Belgium €5,948
Denmark €6,073
EU total €18,704
Cheque Value Per Capita ‐ 2007
Italy €19,674
EU Cheque Values
EU Cheque Values
Euro area total €21,135
Spain €25,275
France €34,203
Portugal €34,225
Malta €37,415
United Kingdom €39,639
Greece €41,852
Cyprus €50,51
19
Ireland €213,408
14

15. EU Credit Transfer Volumes
EU Credit Transfer Volumes
140 133
124
Credit Transfers Per Capita 118
120 (Volume) 2007
100
88
85 86
80 71
67
63
57
60 51 51 53
44
41 42
35 36
40
27 28
16 16 18
20 11 12 12
7
3
0
Netherlands
Spain
France
Denmark
Hungary
Germany
Portugal
United Kingdom
Belgium
Luxembourg
Greece
Bulgaria
Malta
Romania
Cyprus
Poland
Latvia
Austria
Estonia
Italy
Lithuania
Ireland
Sweden
Slovenia
Finland
EU total
Euro area total
Slovakia
U
www.ipso.ie 15
Source: ECB Payment Statistics November 2008

16. 0
500
1,000
1,500
2,000
2 000
2,500
3,000
3 000
Bulgaria 15
Poland 20
Ireland 36
Malta 45
Greece 66
Source: ECB Payment Statistics November 2008
Romania 69
Portugal 94
Denmark 113
Sweden 118
Italy 120
Estonia 124
Lithuania 136
Slovenia 148
(Value €'000) 2007
Hungary 153
www.ipso.ie
Credit Transfer Per Capita
Spain 226
Latvia 270
Austria 293
Euro area total 328
France 330
Slovakia 344
Netherlands 361
Cyprus 369
EU Credit Transfer Values
EU Credit Transfer Values
Belgium 385
EU total 537
Germany 573
Finland 753
Luxembourg 1,449
U
United Kingdom 2,512
16

17. 2.5
00
0.0
0.5
1.0
1.5
2.0
0.54
4
Romania
0
0.70
Poland
0.86
Hungary
0.88
Czech …
0.88
Slovakia
C di
0.94
Bulgaria
0.99
Source: ECB Payment Statistics November 2008
Denmark
1.04
Latvia
1.10
Ireland
1.13
Lithuania
d D bi C d
1.14
Italy
1.16
Austria
1.29
Greece
1.30
France
1.31
Estonia
www.ipso.ie
C i 2005
Credit and Debit Cards per Capita 2005
1.32
Germany
1.34
4
Cyprus
1.35
5
Malta
(2007)
1.38
8
EU total
1.39
9
Euro area …
1.61
Slovenia
Payment Cards Per Capita
1.65
Belgium
1.65
Sweden
1.67
Spain
EU Payment Cards per Capita
EU Payment Cards per Capita
1.71
Portugal
1.77
Finland
1.84
Lu
uxembourg
1.91
N
Netherlands
2.38
United …
17

18. EU Cheque Reduction
EU Cheque Reduction ‐ Progress
104 104
105 103
99
99
100 98
95
95
94
94 90
90 88
89
84
87
85
81
80
81
74
75
72
Cheque Usage Trends
q g
71
70 Base Year: 2002
67
65
2002 2003 2004 2005 2006 2007
France Ireland Portugal UK
www.ipso.ie 18
Source: ECB Payment Statistics November 2008

19. Relative Importance of Non‐Cash
Payment Types By Volume (2007)
P T B Vl (2007)
Ireland EU
Relative Importance by Volume (EU ) 2007
Relative Importance by Volume (Ireland) 2007
27.99% 8.58%
19.42%
23.94%
25 38%
25.38%
15.60% 36.93%
41.04%
Cheques Cards Direct Debits Credit Transfers Cheques Cards Direct Debits Credit Transfers
www.ipso.ie 19
Source: ECB Payment Statistics November 2008

20. Relative Importance of Non‐Cash
Payment Types by Value (2007)
P T b V l (2007)
Ireland EU
Relative Importance by Value (EU ) 2007
Relative Importance by Value (Ireland) 2007
13.33% 90.67%
6.34%
1.99%
78.34%
3.16%
5.03%
0.56%
0 56%
Cheques Cards Direct Debits Credit Transfers Cheques Cards Direct Debits Credit Transfers
www.ipso.ie 20
Source: ECB Payment Statistics November 2008

21. IPSO Advocacy
IPSO Advocacy
IPSO Policy Paper
IPSO Policy Paper
IPSO Roadmap Document
IPSO Roadmap Document
Fiscal Measures
Fiscal Measures
Strategy on Cheque Elimination
Strategy on Cheque Elimination
Strategy on Cash Being Developed
Strategy on Cash Being Developed
www.ipso.ie 21

22. Lessons Learnt from Other Countries
Lessons Learnt from Other Countries
• Successful strategies are most effective if
Successful strategies are most effective if
there is a strong national consensus
• Shared ownership among all stakeholders
needed of the vision and the payment
strategy
• There should be no cross subsidies
There should be no cross subsidies
www.ipso.ie 22

23. Lessons Learnt from Other Countries
Lessons Learnt from Other Countries
• Merchants and corporates need to fully
Merchants and corporates need to fully
participate in the development of the
strategy
tt
• If savings are passed on – volumes rise
• Cost benchmarkers enable stakeholders
to understand the true costs of each
to understand the true costs of each
payment method
www.ipso.ie 23

24. Lessons Learnt from Other Countries
Lessons Learnt from Other Countries
• Investment in campaigns to persuade
Investment in campaigns to persuade
and incentivise customers work
• Expected that contactless and mobile
payments will become compelling
convenience propositions
• Increase in point of sale devices displaces
Increase in point of sale devices displaces
cash by cards
www.ipso.ie 24

25. Next Steps
Next Steps
• New governance structure needed to
New governance structure needed to
provide strategic direction
• New National Plan needed covering
vision, objectives, deliverables,
milestones and measures
• Barriers need to be identified and
Barriers need to be identified and
solutions developed to deal with them
www.ipso.ie 25

26. Next Steps
Next Steps
• A lead agency to take responsibility for
A lead agency to take responsibility for
the development of the plan
• A public information and education
campaign needs to be developed
• If Ireland does nothing it will fall even
further behind
further behind
www.ipso.ie 26

27. National Payments Plan
National Payments Plan
Government are Leading
Government are Leading
IPSO / Banks Playing a Key Role
Fiscal Policy is Working
Competitiveness Benefits for the Economy
p y
www.ipso.ie 27

28. NPIP Roadmap
NPIP Roadmap ‐ Background
• Discussions with the Department of
Discussions with the Department of
Finance
• Agreed as discussion document by banks
• Changes since its preparation:
Changes since its preparation:
– Credit Guarantee Scheme
– C it li ti S h
Capitalisation Scheme
– Banks in Government Ownership
– Agency Amalgamation
www.ipso.ie 28

29. NPIP Roadmap Key Questions
NPIP Roadmap – Key Questions
• What is the best way to include the
What is the best way to include the
financially excluded?
• How should Government and its agencies
make and secure payments?
• What implications does that have for the
industry?
• How to influence consumers; SMEs; large
corporations?
www.ipso.ie 29

30. Difficulties for SEPA
Difficulties for SEPA
Political Case – Not Business Case
Political Case – Not Business Case
•
Investment Climate
•
Mandate Migration
•
Public Sector Lead?
Public Sector Lead?
•
Fees Debate / Business Model
•
www.ipso.ie 30

31. Difficulties for Ireland
Difficulties for Ireland
Inefficient Payments Behaviours
Inefficient Payments Behaviours
•
Benefits Multinational Corporates
•
Will there be an End Date?
•
Who Will Drive?
Who Will Drive?
•
www.ipso.ie 31

32. NPIP Roadmap
NPIP Roadmap – Issues
• Has the draft roadmap potential use as a
Has the draft roadmap potential use as a
consultation document?
• How should consultation happen?
• Who should consult?
Who should consult?
• Who should be consulted?
• How should it happen?
• When should it be completed?
When should it be completed?
www.ipso.ie 32

33. pat.mcloughlin@ipso.ie
+353 1 663 6740
www.ipso.ie 33