I have been a long term advocate of the need for both Irish society and business to move to more modern payment methodologies and away from the love affair with cash and cheques. The reasons are pretty compelling. Electronic payments are;
- More secure
- Rapidly becoming less costly than cash or cheques
- Mitigate against petty crime
- And ensure that more money stays in the economy and is collected via indirect taxation, benefitting all of society.
As a nation, we Irish, have historically struggled to divorce ourselves from cash and cheques entirely, for a number of valid reasons. In most recent times in a period of, never before seen uncertainty, around the liquidity of banks worldwide we probably became even more tied to using cash….but times are changing fast..
I had the good fortune of participating in a working group around the IrishNational Payments Plan in a professional capacity which engaged the major stakeholder communities around initiatives to drive greater usage of electronic payments in the Irish economy, and while that working group is no longer in place, the recent pace in terms of the deployment of initiatives and adoption of the kinds of measures it proposed and discussed have really proven to demonstrate to me that fundamental change around our usage of cash is starting to happen.
I won’t be tempted to compare our usage of cash with the usual suspects such as the Nordic countries, however 2 facts relating to this part of the world are telling,
- The BBC reported earlier this year that cashless payments have already overtaken the use of notes and coins in the British Economy – THIS YEAR!
- Last week, Visa announced that there was 1 contactless payment per second in Ireland this year.
We have also seen a slew of moves through legislative activity in Ireland aligned to the budget and other activities to up the ante in terms of the transition to ePayments in recent weeks, namely,
- Increasing limits on contactless payments to €30 from €15 from the end of October
- The rolling out nationally of a rounding scheme in order to phase out the use of the 1c and 2c coins
- The scrapping of Stamp Duty on Debit cards replacing it with a transaction charge on ATM transactions to incentivise greater use of contactless payments and less use of ATMs from January 1st
- And lastly the much needed reduction in transaction fees for those accepting card payments so as to not dis-incentivise those offering that alternative.
When these measures are added to the introduction of the Single Euro Payments Area (SEPA) in August 2014, the upcoming mandating of SEPA for Euro transactions in non-Eurozone states in October 2016 and the implementation of eDay in September 2014 to kick start the divorce of the cheque from the state financial operations with business, all of which have made it more attractive to go electronic and less advantageous to continue with paper based payments and are aligned to the clear consumer demand for electronic payments it is becoming clear that the potential for a cashless society is no longer merely a pipedream.
A perfect storm of legislative drivers, changing consumer preferences & behaviours, and technology evolution is driving a step change in our relationship with the payments instruments we use. From a business perspective it is surely now the right time to accelerate the process of ensuring that you are ready for it or perhaps be prepared to be left behind by changing consumer behaviours.