Five credit card firms make up 95 percent of the Irish credit card market, making a distinct lack of competition. Last week, this problem was highlighted by the Financial Regulator. The Irish credit card market is one of the most heavily concentrated in the entire of Europe, it has recently been found. Alongside credit cards, the markets for personal loans and current accounts also have a distinct lack of competition.
The fact that the Irish market for credit cards is so heavily concentrated gives the most cause for concern. A shocking 95.18 per cent of the entire credit card market in Ireland is completely controlled by just five firms, making for a market that is extremely constricted for consumers. In 2002, 94.3 percent of the market was controlled by the five firms. Although it is of little change, this slight increase causes alarm if it continues to rise in the coming years, to where eventually 100 per cent is controlled by the five big players.
The five banks in question are AIB, MBNA, Ulster Bank, Bank of Ireland and Permanent TSB. Even though the study carried out by the Financial Regulator does not name the five banks it refers to, these are the five who issue the majority of credit cards to consumers. This is what has lead to Ireland having one of the most concentrated credit card markets across the continent.
It is very unfair that the majority of the market is being devoured by the big five banks, when 13 other card issuers, most of them offering much better deals than the market leaders, are listed on the Financial Regulator’s public website (itsyourmoney.ie). For example, MBNA’s Standard Card has an interest rate on purchases of 16.9 per cent, and 19.9 per cent charged on cash withdrawals. A charge of €12.70 is made if you go over your credit limit. Even though MBNA has a lower charge on its Platinum card of 13.9 per cent, it still falls far short of the rates offered by National Irish Bank and Halifax – 9.5 and 10.9 per cent respectively.
It is said that the small Irish economy is to blame for the concentrated market, but this is not entirely to blame. The Government’s implemented stamp duty is senseless and is partly responsible for the problem, as well as consumer indolence, meaning that people are scared to switch providers. If people were more willing to switch, then AIB would unlikely get away with a monstrous charge of 22.9 per cent on cash withdrawals.