Online banking payments up by 30% since 2006

The amount of payments made online in Ireland has risen by almost 30% since 2006, during which time the use of cheques declined by half.

The increasing move away from traditional forms of payment towards online banking has been brought into sharp focus in the past week, in the wake of the Ulster Bank debacle.

According to the Irish Payments Services Organisation (IPSO), the use of cheques in Ireland peaked in 2005 at almost 132m. Since then, the number has fallen by 36% to just over 84m last year.

Writing in the IPSO newsletter, Russell Burke, the head of strategic development, said older forms of payments are rapidly being replaced by electronic means of moving money.

“Even allowing for the downturn in economic activity, which obviously has an impact, cheque usage for payments in Ireland is rapidly being replaced by electronic transfers, direct debits, and debit cards,” he said.

The boom in online banking has continued apace in recent years, with the number of registered users increasing by more than 11% last year — passing the 3m users mark.

The number of accounts accessed through online banking rose by 16% and the number of payments made by users rose 15%.

“This may well have been helped by an increase of over 40% in the use of smartphones as well as many banks releasing online banking applications for these devices,” said Mr Burke.

IPSO points out that, despite the economic downturn, the volume and value of electronic credits and debits have held up, and have continued to displace cheques as the preferred method of payments in Ireland.

The total value of automated electronic payments has risen by almost 30% since 2006, during which time the total value of cheques has declined by 50%, though the figure remains low when compared to Europe.

In value terms, the EU average is almost 10 times higher than that of Ireland when it comes to electronic credit transfers. However, on a value per capita basis, Ireland ranks third highest when it comes to direct debits.

Many businesses, particularly utility companies and other billers, continue to promote direct debit as their preferred payment method, with almost 5,000 Irish businesses now registered as direct debit originators.

IPSO also points out that the Irish continue to be very heavy users of cash, with over €21bn being withdrawn from ATMs last year.

Although somewhat down from its peak during the Celtic Tiger, Ireland remains the highest per capita user of cash in the EU.

In 2010, the average value of ATM cash per capita in the EU was €2,600 while in Ireland it was just under €5,000. This dropped to €4,618 in 2011, but still remains by far the highest in the EU.

According to IPSO, part of the reason for the decreasing cash figure is the continued rise in popularity of the debit card.

The number of debit card transactions increased by 14% in 2011 and rose by 140% in the five years from 2006 to 2011. The number of Irish-issued debit cards is now 4.4m, compared with less than 1m in 2006.

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