When cash is no longer king: The future of payments in Ireland

There were, on average, 103 million contactless card transactions recorded each month in Ireland over the first half of the year, with an equivalent value of €1.7bn.

Cash may still be king, but for many years now it has been fending off usurpers to the throne as contactless payment takes more and more of its domain and tech companies get in on the action, slicing up a sizable portion for themselves.

The move towards contactless payment options accelerated over the pandemic rising to 84% of all point-of-sale transactions according to the Central Bank of Ireland. At the same time, cash withdrawals from ATMs fell from €1.5bn to around €1bn a month.

There have always been certain businesses that have only accepted cash and many of them won’t be swapping to cards soon. However, in recent years there has been a growing number of companies that only accept card payments.

According to the Competition and Consumer Protection Commission (CCPC), businesses must accept cash “unless it is clear they only accept other ways to pay.” This can be as simple as a sign in the shop saying “card transactions only’” as long as you decide to continue in the presence of such a sign, this is considered an agreement.

Ruth Deasy, who co-owns the Bear Market Coffee chain with her husband Stephen, said they went cashless in their stores back in 2019 and while it might work out a bit more expensive than operating both she said it is worth it when it comes to the business efficiency.

Husband and wife team Stephen and Ruth Deasy of Bear Market Coffee shop which was one of the first in Ireland where customers cannot pay with cash.

“I don’t think we save any money by going only card, it wasn’t really a financial decision in that way. Most of our businesses are placed around the city centre or the financial district and they are really, really fast-paced. People want to come in, they want to get their latte, they are running to work and we’re really conscious of their time,” she said.

“We kind of felt when we were taking cash, your head was down in the till, you are counting out all the coins and you are just really distracted.” 

Ms Deasy said there are times when people come in with cash and they are taken aback when you say you don’t accept it but this is outweighed by the pros in terms of speed, being able to interact with customers, the cleanliness of not having to handle notes and coins all day.

She added there is also the safety aspect as they’ve had three break-ins over the last year and one armed robbery attempt. “At least there, they could say we honestly don’t have any cash and there is nothing on the site.

Ms Deasy said that keeping track of operations is also so much easier as there is no counting the cash up at the end of the day and once the cleaning is done, staff just lock up and head home.

“We have live figures on how every store did. Everything is seamless, it’s all online, it comes in the next day from the banks,” she said.

“So for the few customers for whom it might not be for them, I 100% understand that,” she said. 

I can’t imagine the whole of the city being cashless, choice for people is really, really important. We’d never go back on it.

There are still costs associated with offering only card services but they are not seen by the customer at point-of-sale but rather the business is charged a fee by the card issuer — is usually either Mastercard or Visa.

Customers are charged as well for this service but it is capped at 0.1% of debit transactions for both Mastercard and Visa and 0.3% for credit transactions.

In addition to the duopoly of MasterCard and Visa in the issuing of cards, tech companies like Apple and Google are taking a sizable portion of the contactless payment market. Mobile payment wallets — such as Apple Pay and Google Pay — now account for 32% of all card transactions undertaken at a point-of-sale terminal.

However, while there may be an increase in new forms of payments, it is clear that cash is not going anywhere.

Pushback

The debate over the issue reemerged in August, when the NCT operator Applus+ announced that the service would be going cashless saying that payments must be made in advance of attending the inspection. Following the announcement, there was a backlash with the company ultimately reversing its decision.

Dr Olive McCarthy, director at the Centre for Co-operative Studies at the Cork University Business School, said the conversation about cash in society is often centred around particular demographics — and the outsized impact it might have on them — but it is also about preserving choice and privacy for everyone.

“There is a lot of discussion around the access to cash for the elderly or lower-income groups or more socially vulnerable citizens. It is not just about them,” she said.

It is about everybody and maintaining choice for those who wishing to use cash.

Dr McCarthy added businesses that do use cash, have the hassle and cost of lodging it into the bank but those who accept cards have to pay per transaction which can significantly eat into the profits.

There have been a number of instances in recent months and years where companies have seen a pushback when attempting to withdraw cash services with the NCT debacle being the most recent example.

Earlier this year, the GAA was caught in the crosshairs of a similar issue over its policy of selling tickets online and not through turnstiles or nearby kiosks.

Although tickets were available for sale from Centra and SuperValu, organisations that represent older persons such as Age Action said the online purchases excluded a large proportion of pensioners.

In July last year, AIB received significant pushback after it announced that 70 of its 170 branches would go cashless with cash withdrawals, ATMs, and cheque services no longer being offered. The move drew widespread criticism, particularly from rural communities.

The backlash was so significant that less than a week later the company folded and reversed its decision. According to the Central Bank, 73% of Irish adults use ATMs regularly but the cash total of withdrawals has fallen by 33% since the beginning of the pandemic.

While there was a big dip in withdrawals owing to covid, Dr Olive McCarthy said since then, the value of withdrawals from ATMs has remained steady “so any talk of a decline is probably exaggerated”.

In value terms, cash withdrawals amounted to roughly €1.5bn per month prior to the outbreak of the pandemic. Since May 2020, withdrawals have fallen under €1bn per month.

While there was a big dip in withdrawals owing to covid, Dr McCarthy pointed out that since then the value of withdrawals from ATMs has remained steady “so any talk of a decline is probably exaggerated”.

Convenience

John Lowe, of Money Doctors, said he expects society to be completely cashless by 2031 as there are a number of advantages for people to move from cash.

He said contactless cards and payments via mobile phone wallets are convenient, safer as you are not carrying around money, and allow you to keep an eye on your finances more easily.

“I embrace it, I think it is a good move. It is convenient, everything is about convenience. It’s much safer, it’s a lot more accountable. You can check your account on the same day,” he said.

Mr Lowe said that he understands moving away from cash would pose difficulties to certain people, such as those who rely on tips, people on the streets and organisations such as charities, but this is the way society is heading.

He said people should embrace the change as it is going to be better for people’s pockets in the long run.

Data from the Central Bank of Ireland shows that, in total, €6.8bn has been spent or withdrawn on cards each month since the start of the year.

During the first six months of the year, Irish households recorded 971 million credit and debit card transactions worth €40.1bn. There were, on average, 103 million contactless card transactions recorded per month over the first half of the year, with an equivalent value of €1.7bn.

Cash in the EU

As the adoption of contactless payments continues to grow, the EU has sought to reassure people that cash will continue to have a place.

As part of its proposals on the possible implementation of a digital euro, the EU Commission is also looking to pass legislation that will safeguard the use of cash and ensure that it is widely accepted across the bloc.

Dr McCarthy added that the European Central Bank’s cash strategy is aiming to protect cash for those who have a preference for it and other countries in the eurozone have gone as far as to mandate accepting cash through legislation.

She said that 11 of 19 eurozone countries use cash more than Ireland.

“Some of the ones that would stand out would be Malta, 80% of payments in cash. Germany, Austria, Slovenia, very high levels of cash payments,” she said.

“In France it is a criminal offence not to accept cash. Spain legislated last year that you had to accept cash. Slovakia has it embedded in their constitution that you have to pay in cash.”