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Ditching cash and cheques could save Ireland EUR1bn - NIB

09 September 2010  |  13035 views  |  1 credit card

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)

Comments: (1)

Paul Love
Paul Love - Open Payments Cloud - Nottingham 09 September, 2010, 12:53

Trying to accurately measure the ‘cost of cash' is something that has been causing problems to the EU for a while, although we do see some brave souls trying to put a figure on it. Back in February RBR stated that cash costs €130 per person in Europe. If this number is accurate, and we have no reason to believe it any less accurate than any other estimate, then it just shows the extent of the problem in Ireland if cash and cheques cost €680 per person there.

Contrasting this piece with today's news about declining cash and cheque use in the UK, it shows just how far the Irish government and banks have to go to create a similar environment to the UK's that encourages electronic payments.

To date, the industry has struggled to really make the case for the consumer to move. It sounds like the NPIP is committed to the end of paper-based payments, but it would be good to see a juicy ‘carrot' rather than a lot of ‘sticks'.

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