What’s the smartest way to pay, day-to-day?

“Do you mind if I tap?”, asks Caroline, the barista in my favourite coffee spot, as I hand her my debit card to pay €2.50 for my routine morning iced coffee.

“Not at all” is my standard reply, as I contribute to the one million contactless payments that are now made every DAY in this country.

I appreciate it when she shows me the amount she has keyed in to the POS terminal before tapping. Not that I don’t trust her, but it’s always nice to have the comfort of seeing that she didn’t miss a decimal place on the €2.50 and accidentally charge me €25 with the tap of a card.

A few weeks ago, the cafe’s contactless function was being a bit moody and wouldn’t always accept a tap. Without thinking, Caroline would pop the card into the POS terminal as an alternative and ask me to enter my PIN.

She doesn’t know that by doing so, she has just increased the cost of my coffee by 8%.

You see, my bank charges 0 cent for contactless payments, but 20 cent for chip and PIN.

What does your bank charge for contactless payments?

As the moment, only two banks charge a transaction fee when you use contactless. That's Bank of Ireland and Ulster Bank and the fee is just 1 cent.

AIB, N26, Revolut and An Post don’t charge a penny but this could change in the future as contactless becomes ever more popular. AIB, for example, once considered introducing a 20 cent fee for contactless, but has waived this several times 'until further notice' it says.

KBC will charge you nothing with its Extra current account as long as you lodge €2,000 into the account each month.  

Permanent TSB on the other hand will actually pay you back 10 cent every time you use your card in store or online, up to a maximum of €5 a month.

Contactless can be used to pay for items up to €30, with an increase to €50 expected before the end of the year, and although some people express concern over the security of the method, the number of transactions continues to grow.

Chip and PIN

In some cases, chip and PIN is to be avoided if you’re looking to save on fees.

AIB and Ulster Bank charge 20 cent every time you pop your card into a POS terminal and enter your PIN, while Bank of Ireland charges 10 cent.

N26, Revolut and An Post will charge you nothing while Permanent TSB, as mentioned above, will actually pay you 10 cent back into your current account.  

Again, with KBC’s Extra current account you won’t be charged anything as long as you lodge €2,000 each month. 

Cash

There are no immediate fees charged when you use cash to pay for your morning coffee, but if you regularly use an ATM to withdraw cash, this could be costing you big in fees.

An Post charges 60 cent per ATM withdrawal, AIB charges 35 cent, Bank of Ireland charges 25 cent and Ulster Bank charges 20 cent.

Permanent TSB charges nothing while KBC's Extra account charges nothing as long as you meet its minimum monthly lodgement criteria of €2,000.

N26 allows you five free ATM withdrawals a month, after which there is a €2 charge, while Revolut allows you to withdraw €200 a month for free, after which a 2% fee is added. 

So if you took out a tenner to pay specifically for your coffee, with An Post it could end up costing you almost 25% more and with N26 80% more! 

If your preference is to pay by cash, it’s wise to get into the habit of asking for cashback if you’re paying for your groceries by card, for example. There’s no charge for accessing cash this way.

Google Pay and Apple Pay

AIB, KBC, Ulster Bank, N26 and Revolut all offer Apple Pay. The same five providers offer Google Pay too.

Bank of Ireland, Permanent TSB and An Post are yet to offer either.

The providers all treat mobile payments the same as contactless. This means they're free with AIB, KBC, N26 and Revolut and 1 cent with Ulster Bank.

Mobile payments are possibly more secure than paying by contactless. Every time you tap your phone or Apple watch to a terminal to pay for something, a temporary card number is created to complete the transaction so your actual details are never even shared with the shop you’re in.

Credit card

In the days of Laser and before contactless was introduced, a shop would probably have scoffed had you tried to pay for your morning coffee with your credit card and a signature. 

Nowadays, with most people using Visa debit, which looks similar to a credit card, and with credit cards also having the contactless functionality, shops won't bat an eyelid if you whip out your credit card to tap and pay for something small. 

Credit cards don't charge day-to-day transaction fees meaning as long as you pay off your balance in full and on time each month, they can be a good way to pay for smaller items - just be sure to keep track of your spend!

Overview of payment charges

*All fees can be avoided if €2,500 maintained in account at all times

**Transaction fees can be avoided if €3,000 maintained in account at all times. You cannot avoid the maintenance fee 

***Transaction fees can be avoided if €3,000 maintained in account at all times. You cannot avoid the maintenance fee 

Know your fees

Whether your preferred payment method is contactless, chip and PIN, Apple Pay or good ol’ cash, it’s good to know the costs associated with each. And don’t be afraid to speak up if you are about to be charged in a way that’s not your preference.

If you aren’t happy with what your bank is charging in fees, you can quickly compare your options and switch for a better deal. We’re here to help!