Card will be king in new year as cash on way out
Saturday December 26 2009
SHOPPERS and businesses will be using more plastic and less paper money quite soon under a new Government plan to reduce the amount of hard cash in circulation.
A task force will be set up in the new year to come up with ways to cut down on cash transactions in the economy, the Irish Independent has learned.
The move is being given an added impetus by the rise in tiger kidnappings of bank staff, allied to the need to make the economy more efficient.
Elements of the plan are expected to include:
- Promoting the use of Laser and debit cards.
- A basic bank account for people on low incomes.
- Phasing out cheque books.
- Business invoices being paid directly by banks.
Ireland comes second only to Greece in Europe in terms of the amount of cash and cheques used in the economy.
Scandinavian countries top the league table for the least amount of cash in circulation and greatest use of electronic payments -- a key element in their status as the most competitive nations in the region.
The age-old excuse of 'the cheque is in the post' will be confined to history.
And cheques are going to be phased out completely within the next five years.
Already, some firms and shops are signalling they won't take cheques anymore.
This form of payment is now regarded as being significantly open to fraud and abuse by business customers who want to delay payments.
A glitch in the system that will have to be addressed is social welfare payments.
Half of the €21bn paid out this year was immediately converted into available cash.
Child benefit and pensions can be lodged into post office or bank accounts.
But to cut down on welfare fraud, for the past 18 months, dole payments have had to be collected directly from the post office.
The creation of a basic bank account for people on low incomes, with an ATM card but no overdraft or credit card facility will help to address this problem.
A report by the financial consultants, Accenture, found five years ago that converting to the greater use of electronic payments would be worth €1bn to the economy.
Industry insiders say the competitive advantage to be gained from computerised payments would now be a multiple of this amount.
Finance Minister Brian Lenihan is going to set up the payments task force early in the new year.
His Cabinet colleague, Justice Minister Dermot Ahern, is also keen to see the plan advanced due to the increase in kidnapping of bank staff.
There are also the constant security fears over the movement of cash and the need for the army and gardai to provide escorts.
The task force will include members from the Department of Justice and An Garda Siochana. The Department of Social Welfare and the Central Bank will also be on the group.
- Fionnan Sheahan Political Editor
Irish Independent
