Wednesday 26 April 2017

We need to kick our €1bn-a-year cash and cheque habit

Charlie Weston Personal Finance Editor

OUR obsession with cash is costing the economy around €1bn a year, National Irish Bank (NIB) said yesterday.

Irish people are among the most intensive users of cash in Europe, but a move away from paper-based systems would save a fortune.

Cash withdrawals per person in this country are twice the European average, said NIB economist Dr Ronnie O'Toole.

People here withdrew more than €25bn in cash from ATMs last year. This equates to €6,031 per person, compared with a European average of €2,000.

Irish people withdraw more in one month than the average Dane withdraws over a full year, said Dr O'Toole.

We are also the second most frequent users of cheques in the EU, after France. We wrote 102 million cheques last year -- an average of 26 a head.

The use of cheques is hugely expensive for consumers as there is stamp duty of 50c on each one. Some banks also impose charges of up to 30c on top of this. If posted, the cost per cheque rises to €1.30.

Dr O'Toole said heavy use of cash perpetuates the shadow economy. Some estimates have put the loss to the Exchequer from the black economy at €6bn a year.

The economist said that although the Government had taken steps to reduce cheque usage, other countries have taken more radical action, such as the UK government's committing to abolishing cheques.

But Dr O'Toole said state agencies and the likes of the Department of Social Protection and Revenue were among the biggest issuers of cheques in the country.

NIB says state agencies should stop issuing or accepting cheques, and the Government should increase stamp duty on cheques to reflect what it calls their 'full social cost'. The NIB report urges the Government to target a 95pc reduction in cheque usage and a reduction of cash usage to below the European average by 2013.

Irish Independent

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