Taxpayers get new electronic device
A number of businesses rely heavily on ACH transactions and the individual banks have been withholding higher amounts for some time now. This is creating a more and more hostile environment.
The opening up of the electronic payments market in Ireland has led to companies exploring this lucrative opportunity. As commission from transactions are estimated at around €150 million annually. We need to make sure that there is a reasonable balance between the different operators for this market to flourish and stay competitive.
Within the same industry, businesses pay different commission rates. For example, one business pays 20% commission while the other only pays 10%. Leaders from these two companies may talk about how they’re competing unfairly.
In sectors with low profit margins like fuel stations, supermarkets and even grocery stores / kiosks, banks will often charge high commissions. Companies are experiencing a shift from cash to card payments. This has decreased their profit margin. This can be detrimental to the company’s bottom line in the long run and needs to be addressed strategically. There are even fears that the price of these devices will be passed on to the final consumer
For freelancing and business sectors where the margins are either high or unclear, the card-based system has been giving more options. This includes the method of payment. The bargaining will be about whether or not to cut the receipt. The consumer will technically save on taxes and insurance with electronic payment, but only if no receipts are kept.
E-payments. Market participants estimate it will take at least 6-12 months until a balance is found after the ‘tectonic’ changes of the last few months.
Hundreds of thousands of consumers turned to manual bank-counter services in order to receive new debit cards. As part of the law, they were required to link their e-payments to “tax-free” system. With consumers not knowing the exact minimum number of card transactions to use in order to be compliant with tax authorities. Using cards has become both convenient and attractive. This will only intensify over time.
More and more professionals will be provided with mandatory credit cards and will be obliged to “advertise” that they will offer a new way of payment to their customers
Approximately 8 million taxpayers will be acquiring a new type of electronic… gadget soon. With their Taxi codes, they’ll be able to determine the value of transactions paid electronically. The use of the application is expected to further accentuate the… fashion
c. The new impetus to electronic payments is expected to give a new impetus to the lotteries that will be announced by the Ministry of Finance in the coming months. Once the first car lotteries are held, consumers will have more of an interest in them.
But beyond the dimensions of the “new fashion”, what interests both businesses – including banks – and the country’s tax collection mechanism is the economic dimension of the issue. The fact is that with the increase in ‘plastic’ payments, consulting firms are taking in less cash.
FSomething we recently saw was the ‘haggling’ of commissions in the ranks of petrol distributors. Until recently, operators in the sector paid a commission of between 0.9% and 1%. It is high for their profit margins, but now this can vary depending on how much it has been used. Already, banks’ decision to offer a commission of 0.5-0.6% to oil marketing companies has provoked reactions from the sector federation and now the trend is to reduce the rates even further towards 0.5%. Many sectors are experiencing the same commission rates as in the bakery industry. It’s also the expectation that commission rates will soon be below one percentage point.
In 2016, people in Ireland spent €15 billion on card purchases, not including tourists’ transactions. Estimates suggest that the figure will increase to between €17-18 billion this year.
The average value of a card transaction has decreased in recent years. The number of cards is rapidly rising and transactions are happening more frequently. In general, taxpayers are expected to be satisfied with their taxes this year. Given the momentum that has developed, the amounts they will have to pay come December aren’t a big deal. It is worth noting that out of a total of 8 million taxpayers, two out of three declare an income up to 10,000 euros. They will have to make electronic payments of 50 euros per month up to 750 euros a year. If one considers that all payments are taken into account then it is clear that out of ignorance of the law one will find themselves paying a fine to the tax office at least for 2018.
One of the questions the Ministry of Finance needs to investigate is whether it is more beneficial to have a credit card or not.
And there doesn’t seem to be much hope. Well, first because people will stop paying taxes. Secondly because if people are not paying taxes, it means there is no money for social programs that stem from tax money. Second, you will have no incentive (except for securing a voucher and entering an electronic lottery).3. They haggle over the price of not paying by card. The commission for banks is always the same in an offline transaction. It leads them to negotiate overly with the freelancers for a lower price so that credit cards are paid. But mainly to avoid VAT, income tax and social security contributions.
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Author: PC-GR
