"OBSOLETE" CHEQUES should completely disappear from Ireland by 2016, the Irish Payments Services Organisation (Ipso), a body that represents the main banks, will say today.
The Republic's unusually high use of cheques and cash is costing the economy up to €1.4 billion annually and will seriously damage the competitiveness of Irish businesses unless the Government introduces a national plan to eliminate cheques and reduce the State's dependence on cash, according to Ipso.
Chief executive Pat McLoughlin will tell a payments industry conference that heavy use of paper-based payments will put Irish businesses at an even greater disadvantage once Europe-wide bank accounts are introduced by 2010.
"It is one of the biggest difficulties we have in the Irish economy compared to other European countries," Mr McLoughlin said yesterday.
"In the current climate, competitiveness is very important. We can't do much about oil prices or the credit squeeze, but this is one thing that we can do something about without much investment."
Cheque usage has declined slightly in recent years, but the Republic is still issuing 29 cheques per capita per annum, compared with a EU average of 15 cheques per capita. The average cheque value per person per annum in the Republic is also €215,000 compared with an EU average of €20,000, suggesting that businesses here are fond of using cheques, probably as a means of managing their cashflow.
Some countries have already phased out the use of cheques completely and the UK government will shortly announce a national plan for their elimination. Ipso is anxious that the Republic does not fall behind and is in discussions with the National Payments Advisory Group, which is chaired by the Department of the Taoiseach, about an Irish national plan.
"We would see 2016 as an absolutely realistic timeframe and we could even get rid of cheques before that," Mr McLoughlin said.
There has been a 40 per cent increase in debit card ownership since 2006, with three-quarters of the Irish population now holding a Laser card, according to new figures from Ipso.
But Mr McLoughlin said Irish consumers were still withdrawing 10 times the amount of cash from ATMs than Denmark, which is the least cash-dependent EU state.
European banks are currently working to introduce the Single Euro Payments Area (Sepa). The project is being overseen by the EU's internal markets commissioner Charlie McCreevy, who is the keynote speaker at today's conference in Dublin. Under Sepa, people will be able to set up a single European bank account that can send and receive payments from across the EU by 2010. But there are no plans for an EU-wide cheque clearing system.
