Consumer Corner: Is cash doomed to die out?

Pic: iStock

You know the frustration of pulling into the car park of your local supermarket and realising you have no euro coin for the trolley. 

Then there’s the person collecting money at the door of the store for a charity you would like to support but you have no cash either in your pocket for that. 

There’s so many places we can now use our cards or phones to pay for items that we can often forget to carry cash. However, for many cash remains vital to what they do.

We have been raised on the notion that cash is king but is its reign coming to a crushing end? 

Will cash be extinct in years to come and cards and phones be our sole form of financial exchanges?

Barry McCutcheon, Proposition Lead at Royal London Ireland said there has been a sharp increase in cashless payments in Ireland in recent years with many people carrying very little cash or none at all.

In a survey conducted earlier this year by Royal London Ireland to understand the use of cash among Irish people, it found that one in five people never carry any cash and of those that do, almost one-third carry €20 or less. 

Half of those between the ages of 18 to 24 said they never carry cash. The survey said that the top three reasons people did carry cash were to pay for small daily grocery items such as bread or milk, to pay service providers who prefer to be paid in cash and to buy takeaway lunch or on-the-go refreshments.

“Our survey findings gave weight to the assertion that the younger you are, the less likely you are to carry cash. 

This being said, it’s clear that there is still a strong need for cash in Ireland, with 80% of people surveyed carrying some daily amount,” said Mr McCutcheon.

Of course, there is some generational aspect to the use of cash with younger people generally being more tech savvy and using technology more to pay for items. 

Despite the increasingly digital nature of Irish banking and payment systems in recent years, cash still plays a vital role in Ireland’s society and economy, with many people relying on it when going about their day-to-day routines.

There are many situations where people will prefer to use cash. Tipping is a big one. Donating to charity or putting money into someone’s card for their birthday. Also, many parents will like to pay their kids pocket money in cash.

In the Department of Finance’s Retail Banking Review published in November of last year, a recommendation was made for the introduction of legislation to safeguard the access to cash.

“It is evident from our research that for many, there are times when only cash will do,” said Mr McCutcheon.

Kevin Johnson, CEO of the Credit Union Development Association (CUDA) said that in an era marked by rapid technological advancements and the increasing digitisation of financial services, the role of cash in Ireland remains a complex and nuanced topic.

"The circulation of cash one of the fundamental purposes of the banking system as we know it, is under serious threat of becoming redundant. There are many sides to this argument while the shift towards digital banking offers undeniable convenience and efficiency, it is essential to acknowledge that certain segments of the population may not fully embrace or have the requisite skillset to adopt it," he said.

This reality underscores the ongoing need for cash as an essential means of enabling financial inclusion.

In a CUDA as many as 60% of Irish people anticipate that cash services, particularly those in banks, will be removed in time with just 6% believing that these services will be retained indefinitely. 

A further 15% foresee that while cash services will be retained, we will have to pay a lot more for them in the near future.

"The allure of digital banking is evident, promising streamlined transactions, real-time account management, and the undeniable convenience of mobile payment solutions. However, a significant portion of Ireland’s population, particularly older individuals, may not be as tech-savvy or might face barriers in adopting internet-based banking," said Mr Johnson.

Statistics from Eurostat found that 275,000 people in Ireland over the age of 65 who are not using the internet. 

This is a hugely significant demographic of our society in which the availability of physical cash assumes a vital role.

“Cash remains a tangible and universally understood form of transaction that requires no digital literacy or internet usability. It provides a level of financial autonomy, allowing individuals to manage their funds without being reliant on technology that may be inaccessible to them. For many elderly individuals, the act of physically handling money carries a certain level of reassurance and control," Mr Johnson added.

He added that the majority of Irish people believe that the buck stops with the Government and the Central Bank to ensure that people have access to cash in their local communities.

"This is a critical and national issue that needs forward-thinking centralised planning."