Cashless society is coming but cheques will be the first to go
IT might be ironic that at a time when so many people in Ireland are short of money, are spending less and the banks are cutting off access to it, that a major report on our over-use of cash (and cheques) should be published.
Money Express by Jill Kerby in association with Aviva
But this is an issue that has significant consequences to the way we will all do business in this country, and even, according to the Minister for Justice, to the commissioning of serious crime.
I don’t accept Minister Ahern’s view that our high usage of ATM machines is a bit factor in the prevalence of so-called ‘tiger’ kidnappings of bank officials and their families. He believes if the banks didn’t have to keep so much cash in ATM machines they wouldn’t be such popular targets.
That said, according to the recent report by National Irish Bank, whose parent bank is Danske Bank, our continuing preference for cash and cheques contributes to all sorts of unacceptable behaviour here, some of it much more prevalent than in the rest of Europe or especially in Denmark where cash is the least favourite form of money.
The report says that countries that have high cash/cheque usage have higher levels of everything from the slow payment of bills (as in, “the cheque in the post”), black economy activity and tax evasion, the growth of vice industries like prostitution, illegal drugs and other contraband and an overall higher cost of doing business for merchants, consumers, the banking industry and even the government.
Hundreds of millions of euro could be saved, says Dr Ronnie O’Toole, NIB chief economist and author of ‘Target 2013: Modernising Payments in Ireland’ report, even if we halved our use of cash and cheques. We write c26 cheques per head of population here compared to just to the seven or so written in Italy and the three cheques that Danish people write each year.
We withdraw €6,031 annually from ATM machines per head of population compared to the average €1,936 per capita in the rest of Europe and just €459 per head in Denmark, the most advanced European country for non-cash forms of money usage.
O’Toole estimates that €2 billion is waiting to be saved by minimising cash/cheque usage and substituting debit cards and electronic money transfer, with a savings of as much as €680 for every Irish household.
Cheque use among ordinary consumers is already very low, he concedes, but business users are the main culprits. The government, the single largest cheque issuer in the state, could set the pace, he says, by ending all cheque payments by government departments and agencies and then announcing a date, say two years from now in October 2012 when all cheque usage in the state would end.
After that, O’Toole says it’s just a matter of time before retailers, service industries and everyone else embraces the technology which is either already in existence or is being developed to allow for easy cashless payments and money transfers, including for tiny purchases, like a newspaper and litre of milk at the local corner store. 2013 should be the date in which we see a halving of cash and cheque usage.
Interestingly, NIB expect the transport industry to lead the way, as it has in other more advanced, non-cash countries.
“When all public transport systems are accessible via a debit or money card,” suggested O’Toole, “then I will certainly feel absolutely secure in going out my house in the morning without the usual €40 that I like to keep on me – just in case, I have to hail a taxi home, for example.”
Integrated rail/Luas/Dart and bus tickets in Dublin next year will help the process, he says, but it is cashless taxis that will really help build up a head of steam for a nil-cash society.
The banks do not envisage a complete ban on cheques – they accept there will be a place for cheque usage for older people especially who currently will not or cannot adapt (like those in nursing homes who don’t have easy access to banks), but this generation of pensioners will be the last to be accommodated.
Some concern has also been expressed about how dependent we will become on technology: what happens during protracted power blackouts or a natural disaster?
Some people – including yours truly – will also lament the further loss of privacy and anonymity that an entirely cashless system will copper-fasten. I think the government, grocery stores, Amazon.co.uk and the Revenue already know far more about me than I ever intended them to know.
If every item I purchase in the future gets captured by an electronic chip imbedded in a souped-up debit device, then Big Brother won’t just be looking over my shoulder – I’ll be carrying him around in my purse.