Ireland cold save EUR1 billion a year by ditching cash and cheques in favour of electronic payments, according to research from National Irish Bank (NIB).
In a report, the bank's chief economist, Ronnie O'Toole, claims Ireland is the most intensive cash user in Europe, with its population withdrawing over EUR25 billion from ATMs last year.
In addition, Ireland is the second most extensive user of cheques in the EU, after France, with 102 million written in 2009.
Says O'Toole: "The reliance on paper-based payments has a number of high costs for our society. Annual savings of around EUR1 billion could be made by switching to electronic systems. This is equivalent to around EUR680 per household per year."
O'Toole argues that cash perpetuates tax evasion in the shadow economy and encourages criminal attacks while cheques are environmentally damaging and are a major contributory factor behind Ireland's 'late payments' culture.
The report calls for Ireland to target a 95% reduction in cheque usage by 2013 while getting cash levels down to below the European average by the same year. To do this, it calls for an 'E-Day' to be announced for October 2012 with a 'payments transition board' overseeing the move.
O'Toole says taxation on debit cards should be dumped and a single ATM network established while retailers should encourage a move from cash by introducing card-only lanes.
Meanwhile, state agencies should stop issuing or accepting cheques by the 'E-Day', the cheque guarantee scheme should be abolished and stamp duty on the payment method should be increased.
Ireland's dependence on paper money has come under the spotlight recently, with the government agreeing to the creation of a high level group that will establish a National Payments Implementation Plan (NPIP) designed to wean the country off its dependence on cash and cheques.
Earlier this month a government minister floated the prospect of charging customers for using ATMs as a way of encouraging a move to electronic money, although he was quickly forced to backtrack in the face of fierce opposition.
The NIB report comes as it emerged that the UK is witnessing dwindling usage of cash and cheques as debit cards become increasingly popular. The country's banks have already decided to phase out cheques altogether by 2018.
You can read the NIB report here:Download the document now 853.3 kb (PDF File)