Cash and cheque costs burdening Irish SMEs, says NIB

Small and medium sized firms in Ireland are facing much higher costs than their European competitors because of their continued dependence on cash and cheques, according to National Irish Bank.

“Small businesses in Ireland are currently burdened with a huge level of unnecessary cost and administration associated with the very high volume of cheques and cash, which is diverting them from doing what they do best,” said NIB deputy chief executive Kevin Gallen.

Speaking at a session of the Joint Oireachtas Committee on Enterprise, Trade and Employment, Gallen said: “Given our economic position as a very open, exporting nation, excessive costs such as these are increasingly untenable.

“Further, the dependence on a very slow paper-based payment system is an unnecessary barrier to the growth of North-South trade.”

National Irish Bank was invited to speak before the committee following its pre-Budget submission to the Department of Finance, which urged the Government to reform Ireland’s payments system.

In his 2008 Budget, the Minister for Finance Brian Cowen announced the reduction in charges on debit and credit cards, and an increase in the charge on cheques, in line with one of the recommendations of the National Irish Bank submission.

Mr Gallen welcomed the Budget measures, but emphasised that more needs to be done.

“We very much welcome the reforms announced in the Budget,” he said. “By shifting the burden of tax onto cheques and away from debit and credit cards, the reform announced by Minister Cowen will make our tax system smarter.

“We hope that this will do for cheques what the 22c levy did for the plastic bag, by incentivising more efficient ways of making payments.

“However, the scale of the challenge will require further reforms. We hope that the Budget measure will be the first in a concerted programme aimed at transforming the way we make payments in Ireland.”

Also speaking before the Committee was Dr Ronnie O’Toole, Chief Economist with National Irish Bank. Dr O’Toole pointed to the Government’s own research, which showed that savings in excess of €1bn a year to the Irish economy could be made.

“We as a society are still wedded to paper-based payments systems through our extensive use of cheques and cash,” he said. “A typical Irish adult uses 44 cheques annually in their personal and business life.

“Contrast this with Denmark, where only one in 20 firms will use more than two cheques per month. In fact, the vast majority of businesses in Denmark don’t use cheques at all, and many wouldn’t know how to write a cheque if you asked them.”