A 12c charge is to be introduced on ATM transactions as a replacement for the current €5 stamp duty on debit and ATM cards.

However the charge will be capped at €2.50 or €5, depending on the type of card being used, which should mean no additional cost to consumers.

Minister for Finance Michael Noonan said the change was aimed at encouraging people to use their cards more for payments.

The charge paid by retailers for handling debit card payments was also being halved, while the European Union was set to cap credit card interchange fees.

This, Mr Noonan said, should make it easier for retailers to accept cards as payment.

However he said the cost reduction should be passed on to customers in the form of lower prices, while it should also remove the need for a minimum payment for card use.

The transaction limit on contactless payments is also being raised from €15 to €30 at the end of the month.