Overdependence on cash transactions harming competitiveness, warns IPSO

IRELAND’S overdependence on cash is harming the economy and the country’s competitiveness.

Although last year saw some improvement with the number of debit card transactions hitting 181 million, a rise of almost 80% since 2006, the use of cash in Ireland has been growing at 13 times the EU rate according to the Irish Payment Services Organisation (IPSO) in its annual review.

It said Ireland’s attachment to cash limits its ability to compare favourably with most other European countries.

IPSO said that apart from the traditional costs associated with cash such as security, handling, storing and transportation, other ways in which high-cash levels can harm the economy include tax evasion and crime.

IPSO chief executive, Pat McLoughlin said: “Latest figures show that Ireland was put to the bottom third of the EU when it comes to the number of payment cards in issue. We believe that there is a cultural shift required to get Ireland moving in the right direction.”

Figures show people withdrew almost €6,500 on average from ATMs in Ireland last year which is more than twice the EU average.

IPSO also said the number of cheques issued reduced by over 6% which is in line with its goal to eliminate cheques as a means of making payments.

The number of laser and debit cards rose by over 50% to 2.5 million in 2007 and in 2008 rose further to almost 3 million, it said.

Also last year for the first time the number of electronic credit transfers exceeded cheques.

IPSO chairman Dr Don Thornhill said: “As a nation we clearly need to examine our continued dependency on cash and cheques. While citizens in most EU countries are using fast and efficient payments systems, in Ireland we choose to sustain outdated, legacy systems instead of reaping the benefits from our modern payments infrastructure.

“These benefits range from improved safety and security, increased efficiency and speed of payment, to potentially an overall increase in our level of national competitiveness.”

Online banking became very popular last year with more that 2.2 million customers registered, a 27.8% increase on 2007. ATM fraud dropped by 92.5% in 2008, compared to 2007 figures.

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