‘Reduce cash use and save €680 a year’

HOUSEHOLDS could save €680 a year each if they reduce their dependence on cash for transactions which is well above the European average.

That is the claim of National Irish Bank (NIB) chief economist Ronnie O’Toole who said Ireland is the most intensive cash user in Europe.

He wants the Government to phase out cheques, retailers to reward people who pay with cards and also said the tax on debit cards should be abolished.

Irish people withdrew more than €25 billion in cash from ATMs last year and the country is the second most extensive user of cheques in the EU, after France, with 102 million cheques written in 2009.

Annual savings of around €1bn or €680 per household could be made annually in switching from paper-based to electronic systems, said Mr O’Toole.

The bank arrived at the €1bn figure by taking estimates from other European countries on the cost per payment and then multiplied this cost with the number of payments made.

National Irish Bank believes Ireland should target a 95% reduction in cheques by 2013 and a reduction in cash usage to below the European average.

They also said taxation should be switched away from debit cards to encourage more people to use them and a single ATM network should be established, which will allow for a rationalisation of ATMs.

They said retailers should investigate ways of reducing cash usage, such as card-only lanes and loyalty card bonuses for customers who pay by card and all taxis should accept card payment.

The report said the number of ATM terminals in Ireland is low by international standards. There are 766 terminals per million people in Ireland, compared to 855 across the EU.

It said each Irish terminal has 59,500 withdrawals, significantly above the EU average of 34,700. The average withdrawal in Ireland was higher, at €142, compared to €110 in the EU.

“People don’t often make the connection between their ATM usage and criminal attacks such as tiger kidnappings but the connection is very real. The way to reduce these attacks is to stop transporting so much cash,” said Mr O’Toole.

The report also recommends state agencies should stop issuing or accepting cheques by October 2012 and increase the stamp duty on cheques.

It also said the Cheque Guarantee Scheme should be abolished as this was established when cheques were the only alternative to cash for point-of-sale transactions.

“Ireland has a culture of late payments which is putting huge pressure on SMEs. There’s a strong correlation between the extent of cheque usage in a country and the time it takes for firms to receive payment for invoices.” said Dr O’Toole.