In a new study carried out by the Financial Regular, it has been revealed that just five firms are controlling over 95 per cent of the Irish credit card market. This makes it one of the highest concentrated markets in the entirety of Europe.
Alongside the credit card market, it has been found that the personal loan and current account sectors are also too highly concentrated.
All of the financial markets that have been analysed in the Financial Regulator’s annual review have become increasingly uncompetitive between the years of 2002 and 2007; that is all except the market for residential mortgages.
95.18 per cent of the credit card market is controlled by five big companies, making it extremely concentrated. In 2002, 94.3 per cent of the market was controlled by these five, making little change in the last six years.
The majority of credit cards that are issued in Ireland are issued through the Bank of Ireland, MBNA and AIB, making Ireland’s financial sector one of the most highly concentrated markets throughout Europe.
It has been said that Ireland’s credit card market is so highly concentrated because of its small economy, the fact that consumers are too nervous or reluctant to change their financial providers, and because of the government stamp duty placed on credit cards.
However, even with this, people are still explicitly keen on their plastic spending tools. Alarmingly, the Irish population rank third in the world for the highest expenditure with credit and debit cards, falling only behind the United States and South Korea. Out of everyone over the age of fifteen, two out of five in Ireland own and use a bank card.
As for current accounts, 92.3 per cent of the market here is controlled by five banks. This is higher than the statistic was in the year 2000, even in spite of the entry of several foreign banks into the Irish financial market. In the case of loans, the figure is slightly lower but still alarmingly concentrated, with 86 per cent of the market being controlled by five companies. Mortgages are the least concentrated, with five companies controlling only 69 per cent of the overall market.
It has been said that after last year’s report showing the insanely high concentration levels, there has been a small increase in competition in the market. But even with these new competitors, the market still remains too highly concentrated.