# Ireland could make savings of €1 billion annually by switching to electronic payment



## MugsGame (8 Sep 2010)

NIB has released a report from their Chief Economist saying that "Ireland could make savings of €1 billion annually by switching to electronic payment systems."


> National Irish Bank’s report makes the following recommendations for payment reform:-
> * Target a 95% reduction in cheque usage and reduce cash usage to below the European average by 2013.
> * Announce an `E-Day’ for October 2012 to achieve this change by, and establish a ‘Payments Transition Board’ to oversee it.  It is more efficient to have a transformation away from cheques in a relatively short space of time and this would leave over two years to explain to consumers the changes that are going to take place.
> 
> ...



More at [broken link removed] and [broken link removed].

Seemingly the average Irish person takes out more cash in a month than the Danes do in a year!


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## Brendan Burgess (8 Sep 2010)

*Press release from NIB
*​ 

·          Ireland  remains one of the most intensive users of cash and cheques in  Europe;
·          Annual  savings of around €1 billion (equivalent to €680 per household ) could be made  annually in switching from paper-based to electronic systems;
·          High  cash usage also perpetuates tax evasion in the shadow economy and is associated  with a higher level of criminal attacks on  cash-in-transit;
·          Cheques  are environmentally damaging and are a major contributory factor behind  Ireland’s ‘late payments’ culture ;
·          National  Irish Bank believes Ireland should develop an ambitious programme of reform to  change our payments habits, targeting a 95% reduction in cheques by 2013 and a  reduction in cash usage to below the European average.

*8th September 2010  *Ireland’s payments system – the means by which we pay for goods and  services and transfer wealth – remains dominated by cash and cheques which are  very expensive, slow and harmful to the environment. This is according to a new  report by NIB’s Chief Economist, Dr. Ronnie O’Toole.

 According to the report Ireland is  the most intensive cash user in Europe. Irish people withdrew over €25 billion  in cash from ATMs in 2009. Ireland is the second most extensive user of cheques  in the EU, after France, with 102 million cheques written here in 2009.  Cheques  in Ireland amounted to one-tenth of the value of all cheques written in Europe  in 2008.

 “_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 Dr. Ronnie  O’Toole

 While the Government has taken  steps to reduce cheques since 2008, other countries have been taking more  radical action.  Notably, the UK Government has now committed to the abolition  of cheques. National Irish Bank’s report makes the following recommendations for  payment reform:

·          Target  a *95% reduction in cheque usage* and *reduce cash usage* to below the  European average by 2013.
·          Announce  an `*E-Day’* for October 2012 to achieve this change by, and  establish a ‘*Payments Transition Board’* to oversee it.  It is more  efficient to have a transformation away from cheques in a relatively short space  of time and this would leave over two years to explain to consumers the changes  that are going to take place. 
·          *Reducing  Cash:*
o    *Taxation*  should be switched away from debit cards to encourage more people to use  them;
o    A  *single ATM network *should be established, which will allow for a  rationalisation of ATMs.  Banks should also change* ATM functionality* so  as to discourage cash usage;
o    Retailers  should investigate ways of reducing cash usage, such as *card-only lanes*  and *loyalty card bonuses* for customers who pay by card. All taxis should  be required to accept card payment;
·          *Reducing  Cheques:*
o    *State  agencies*  should stop issuing or accepting cheques by E-Day.;
o    The  Government should increase the *stamp duty on cheques* to reflect their  full social cost;
o    The  *Cheque Guarantee Scheme* should be abolished.  This was established when  cheques were the only alternative to cash for point-of-sale transactions, though  few retailers still accept cheques.
·          Vulnerable  people and groups, notably the elderly, should be exempted from these measures  in so far as is possible.

 The report also points out the  many  non-financial costs associated with high cash and cheque usage.  “_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 carbon footprint of each direct  debit is just 0.76g of CO2 per payment, compared to 49.3g of  CO2 for every cheque.  High cash usage also has significant  implications for the Gardaí. According to Dr. O’Toole, “_People don’t often  make the connection between their ATM usage and criminal attacks such as tiger  kidnappings but the connection is very real. The way to reduce these attacks is  to stop transporting so much cash.”  _According to National Irish Bank, an  holistic policy to reduce cash usage must be developed. This should aim to  reduce peoples cash withdrawals from ATMs, while also ensuring that people can  pay for everyday goods and services such as a taxi fares by debit  card.


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## Brendan Burgess (8 Sep 2010)

I agree with getting rid of cheques.

But I like cash. I get infuriated when I just want to pay €1.80 for my Irish Times and the guy ahead of me is buying his paper and 20 Major with a Laser Card. 



> Retailers  should investigate ways of reducing cash usage, such as *card-only lanes* ...


I would actually switch my custom to a shop which had a cash only lane. We luddites who use cash don't slow down the card users. 

I went to a pre-launch of this report last night. Apparently they have contact-less cards in Denmark. You buy your Morgenavisen Jyllands-Posten and just flash your card by a scanner. Quicker than cash. I will go for that.

Brendan


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## MugsGame (8 Sep 2010)

> Apparently they have contact-less cards in Denmark. You buy your Morgenavisen Jyllands-Posten and just flash your card by a scanner. Quicker than cash. I will go for that.


Travel smart cards have this facility too, e.g. Oyster in London. The planned Dublin integrated ticket can do this too. So it's not unimaginable that ticket vendors would change to smart card topup vendors and then allow e.g. newspaper purchases too.


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## camlin90 (8 Sep 2010)

Negative interest rates on deposits... overnight currency conversion to lenny pennies... the possibilities are endless in a cashless society!


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## markpb (8 Sep 2010)

Brendan Burgess said:


> But I like cash. I get infuriated when I just want to pay €1.80 for my Irish Times and the guy ahead of me is buying his paper and 20 Major with a Laser Card.



The biggest problem with cards in Ireland is that so many retails are using analog phone lines for authorisation which makes it very slow. Auth over a broadband connection should take no more than two seconds which is fine. Contactless cards should be slightly faster when they make it here and offline / pin-less authorisations for small amounts would help too.

I laughed at this recommendation:



Brendan Burgess said:


> A single ATM network should be established, which will allow for a rationalisation of ATMs.  Banks should also change* ATM functionality* so as to discourage cash usage


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## TarfHead (9 Sep 2010)

Brendan Burgess said:


> .. Apparently they have contact-less cards in Denmark. You buy your Morgenavisen Jyllands-Posten and just flash your card by a scanner. Quicker than cash. I will go for that.
> 
> Brendan


 
Insomnia coffee shops use a NFC method for logging purchases (loyalty card). The same/similar should be capable of being used for payments - preload an electronic purse with value.

And shops limiting LASER purchases to transactions above a certain value - they're in breach of their agreement with LASER (no floor limit) but who's going to argue that one with a minimum wage shop assistant when there's a queue of people behind you  ?

More on NFC & one Irish provider (no connection) specifically ..
http://www.siliconrepublic.com/business/item/15269-nfc-payments-tipped-to-surp


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## Molly Bloom (9 Sep 2010)

I agree with Brendan that it would be great, and common sense, to make it easier to pay small charges (the newspaper, bus fare, cup of coffee, etc) with a Laser, or an 'electronic purse' filled up with €€€ credits, and not have to worry about either minimum transaction levels, or about slowing people up behind you in the queue.

However, I would have serious objections to not being able to pay my monthly / bi-monthly utility bills by cheque. Despite repeated attempts by O2, Bord Gais, etc, to get me to sign up for direct debit, this Luddite prefers to write her own cheques, allowing her to manage her own cash flow!

It's still possible to pay your bills on time and do it by cheque ........!


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## MugsGame (9 Sep 2010)

> However, I would have serious objections to not being able to pay my monthly / bi-monthly utility bills by cheque. Despite repeated attempts by O2, Bord Gais, etc, to get me to sign up for direct debit, this Luddite prefers to write her own cheques, allowing her to manage her own cash flow!
> 
> It's still possible to pay your bills on time and do it by cheque ........!



I agree, I find it very annoying when institutions tell us that DD (Direct Debits, a pull instruction) are a suitable replacement for cheques (a push instruction under the control of the payer). 

I would happily use a "conditional on approval debit" service that texted or emailed me a week before the withdrawal and gave me an opportunity to deny the debit if I was unhappy with the calculation of the amount. But I refuse to give a utility company permission to debit arbitrary amounts. I know I have the right to dispute a DD after the fact, but the institution and utillity company are much more likely to listen to me if I have yet to pay the bill. Also an unlucky billing error on one DD could clear out my current account. 

Also, for person to person payments, direct lodgement of cash is the only way to guarantee same-day transfer to a different bank. Emergency same-day electronic transfers come with a very high fee and are not actually guaranteed to be credited on the same day. Institutions need to provide a better alternative here too.


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## DB74 (9 Sep 2010)

You can pay your monthly bills by Debit (not DD or SO) so you can still control your cash-flow without needing a cheque


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## Romulan (9 Sep 2010)

I love these eye-catching headlines on reports;

_Ireland could make savings of €1 billion annually _

Great in theory but to whom exactly will the savings accrue?  
The banks certainly but we bank customers will not share in any savings.


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## callybags (9 Sep 2010)

If they mean that overall bank charges will be €1 Billion less, then we will collectively have to pump €1 billion more into the broke banks, so no saving at all.


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## MugsGame (9 Sep 2010)

DB74 said:


> You can pay your monthly bills by Debit (not DD or SO) so you can still control your cash-flow without needing a cheque



Can you link to a description of this Debit payment service? Can I reject a Debit beforehand if I do not agree with the amount? 



callybags said:


> If they mean that overall bank charges will be €1 Billion less, then we will collectively have to pump €1 billion more into the broke banks, so no saving at all.



Storing, transporting and processing cash and cheques is very expensive. Electronic transmission would eliminate these costs. It wouldn't eliminate bank charges. NIB estimate the savings would be split 50:50 between retailers and banks. Competitive pressure should ensure these savings are passed on.


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## roker (9 Sep 2010)

I also will not set up DD, and give control to the payee. I find my Open 24 good for payments, I have control of my account and can pay over the telephone just by keying in the ammount, is this not electronic payment?


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## Gulliver (9 Sep 2010)

I attended the NIB media briefing yesterday.

The report is good on aspiration, and brings attention to a real need - but reform of payment systems can only be brought about by an alliance of the various participants in the system. No one bank, particularly a smaller bank which is currently shrinking its footprint in Ireland, can move significantly ahead of the others, because of the interlinked nature of payment systems.

There is already a payments strategy, currently called the National Payments Implementation Plan (NPIP), which has less challenging targets, and as a member of IPSO, NIB is already a participant in NPIP. Now, NIB clearly and publicly seems to move away from the NPIP and clearly signals its impatience with the progress of that plan. The real issue is whether the NIB initiative will act as a spur to bring a new level of urgency.

To deliver on the NIB plan, the banks will have to improve their payment systems and will have to improve the public perception of the banks as corporate citizens and as service providers. The other stakeholders, government, bank customers, and the general public all have their parts to play.

ASKABOUTMONEY regularly gives clear testament to the public mistrust of banks and failures of their systems. Those failures happen all too frequently. In these days, we rightly expect higher standards from our banks, just as we do from our retailers, our service providers, our manufacturers. The public mistrust is exacerbated when errors are not rectified as quickly as they should. The levels of electronic banking in Denmark, the home country of NIB, will never be achieved until confidence levels are raised significantly.

Initiatives like integrated ticketing are an urgent necessity to make progress. A journey from my house (Monkstown) to my brother's (Suburban Galway) requires Dart, Luas, and Railway tickets - all separate transactions, as well as a taxi which is unlikely (unwilling) to accept anything but cash.

Another urgent requirement is a system of linked online invoicing and payment such as is in constant use in Scandinavian countries. This is the only real way to get major reduction in business cheques.

The quoted figure of €1bn savings is based upon internationally sourced material rather than on Ireland. Nevertheless, I believe that the savings would be very substantial and may be in that region. Those savings would be widely spread through the economy any may include inter alia:-
1...Very large numbers of staff reductions among front-line staff at bank branches, particularly among cashier positions.
2...Large reductions of back-office staff in cash centres, cheque clearing operations, etc
3...Reductions in the cost of physical security in cash distribution, including costs of army/gardai
4...Reduction in costs at retailers and other cash handlers
5...More efficient payment systems eliminate the cost of cheque writing. Also eliminate the costs of stamp duty and postage associated with a cheque
6...Lower bank charges for both business and personal customers must be expected as bank costs reduce

The overall effect would be an improvement in the competitiveness of the economy, and therefore must be addressed with some urgency.


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## MugsGame (10 Sep 2010)

roker said:


> I also will not set up DD, and give control to the payee. I find my Open 24 good for payments, I have control of my account and can pay over the telephone just by keying in the ammount, is this not electronic payment?



Yes, keypad driven telephone banking is electronic and it's certainly less hassle than posting a cheque. And possibly that's what DB74 means by "Debit".



> 1...Very large numbers of staff reductions among front-line staff...
> 2...Large reductions of back-office staff...



So the unions will be all for this change then! And perhaps the overall savings to the state may not be quite so large if redundant staff cannot secure alternative employment.


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## Mrs Vimes (10 Sep 2010)

MugsGame said:


> Can you link to a description of this Debit payment service? Can I reject a Debit beforehand if I do not agree with the amount?




AIB 24 hour online will let you set up e.g. ESB as a payee on your account and then you can just go online whenever you wish and pay however much you want to them. ESB do not contact your bank at any time.

Sybil


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## TarfHead (10 Sep 2010)

Brendan Burgess said:


> I agree with getting rid of cheques.
> 
> But I like cash. I get infuriated when I just want to pay €1.80 for my Irish Times and the guy ahead of me is buying his paper and 20 Major with a Laser Card.
> 
> I would actually switch my custom to a shop which had a cash only lane.


 
This is another alternative. I heard about it in a briefing a couple of years ago and was surprised it hasn't been rolled out in the 'First World' yet.

As I understand it, people in the scheme can make payments to each other by text message, i.e. transferring prepaid phone credit from one number to another.


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## DB74 (10 Sep 2010)

Mrs Vimes and roker have answered your query. I bank with Ulster Bank and I set up ESB & Bord Gais etc as payees and then I determine when and how much I pay them.

Electronic payment is probably the correct term, as opposed to debit.

Apologies for any confusion


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## mmclo (16 Sep 2010)

TarfHead said:


> This is another alternative. I heard about it in a briefing a couple of years ago and was surprised it hasn't been rolled out in the 'First World' yet.
> 
> As I understand it, people in the scheme can make payments to each other by text message, i.e. transferring prepaid phone credit from one number to another.


 
Featured on Newsnight a while back, pretty amazing that Africa etc. leading the way. Seems that countries with poor infrastructure just skipping a few phases and going straight to this!


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## Brussels (16 Sep 2010)

MugsGame said:


> . I know I have the right to dispute a DD after the fact, but the institution and utillity company are much more likely to listen to me if I have yet to pay the bill. Also an unlucky billing error on one DD could clear out my current account.
> 
> Dear Mugsname
> You actually have the right to dispute a DD before the fact. If you receive a utility bill (advance notice) and you are not happy with the amount to be debited you can instruct your bank to refuse the DD. This is enshrined in legislation and is part of the Direct Debit Guarantee


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## Mpsox (16 Sep 2010)

Firstly, in regards to this, we should remember where the report came from, namely a bank that is closing many of it's branches and refusing to accept cheques and cash over it's own counters in the future, this is not an unbiased report.

Secondly, it's easy to say that savings can be made in terms of bank cashiers etc, but that is another way of saying that hunderds, if not thousands of people could loose their jobs. Who is going to be paying for those?, the taxpayer via social welfare payements

Thirdly, since CHIP and PIN was introduced, the protection given to account holders for dubious transactions has been greatly reduced, if you query a possible fraudulent transaction, first standard response from the bank is that you must have allowed your PIN to be seen/copied in some way or had it writen down. Invariably, the customer has to push strongly to get reimbursed.


This report also does not go into the significant investment required to move to a cashless society. Laser and card payments are too slow, especially at peak periods. . Imagine paying for your morning paper and everyone was paying by card, how long would it take you to get served and out. Fees are often incurred as well by the retailer, driving up costs which they are already passing on for web transactions, eg Ryanair and Ticketmaster.

I'm not saying the move to less cash and cheques is not a bad thing, however it is far from the panacea that NIB paint it out to be


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