E-payments 'could save €1 billion'

Up to €1 billion could be saved each year if Ireland moved to electronic payments, a new study said today.

The report from National Irish Bank found that Ireland is one of the most intensive users of cash and cheques in Europe, a system that it said is slow, expensive and harmful to the environment.

Irish people withdrew more than €25 billion in cash from ATMs in 2009, and wrote 102 million cheques, making this country the second highest user of cheques in the EU behind France.

"The reliance on paper-based payments has a number of high costs for our society. Annual savings of around €1 billion could be made by switching to electronic systems. This is equivalent to around €680 per household per year," said NIB chief economist Dr Ronnie O'Toole.

The report also cited tax evasion in the "shadow" economy, a higher level of criminal attacks on cash-in-transit and Ireland's "late payments" culture as key reasons to reform the current payments system and move towards electronic methods.

"Ireland has a culture of late payments which is putting huge pressure on SMEs. There's a strong correlation between the extent of cheque usage in a country and the time it takes for firms to receive payment for invoices," said Dr O'Toole.

The report recommended setting a target of reducing the number of cheques in use by 95 per cent and cutting cash usage to below the European average by 2013.

It said Government could help reduce the level of cash payments used by switching taxation away from debit cards to encourage their use, establish a single ATM network and increase the stamp duty on cheques to reflect their full social cost. Taxis should also be obliged to accept card payments.

However, it also said vulnerable people and groups, such as the elderly, should be exempted from these measures as much as possible.

Minster for Justice Dermot Ahern last week backtracked on his suggestion that more charges for ATM transactions might limit Ireland’s dependence on cash and in turn discourage bank robberies.