Thursday 22 August 2019

A cashless society: but is the cost too high?

Fumbling in the greasy till will soon be a thing of the past, but is it really progress or are we in danger of leaving some sections of society behind

Till the end: Phone payment apps are becoming increasingly common.
Till the end: Phone payment apps are becoming increasingly common.
Edwina Brady and Justin Moran of Age Action - the agency says it will continue to take cash in its charity shops regardless of how cashless Ireland becomes.
John Meagher

John Meagher

The mid-morning queues move quicker now at Coffeeangel, a busy café just off Grafton Street. Where once customers would have to fumble around for loose change, now many are using the 'contactless' debit card system - where they simply scan their plastic - and some are even using the PayPal app on their phones.

"We've noticed a huge change," says owner Karl Purdy. "People like the convenience - and anything that makes the customer experience better is good for us. There are benefits for us too, in terms of efficiency, and banks like it because we're not coming into them with bags of €1 and €2 coins."

Coffeeangel was one of the first establishments in the country to introduce contactless payment two years ago, and Purdy has rolled the technology into his other two cafés nearby. "We're finding that far fewer people are opting to pay with cash than before," he says. "And as contactless becomes commonplace, people get used to paying for things this way. Once Apple Pay comes on stream in this part of the world, they'll be using their smartphones more often too."

His words will be music to the ears of mandarins at the Central Bank, which has lately been pushing for Ireland to move closer to the Scandinavian model and use debit cards, internet banking and phone payment apps, rather than notes and coins, wherever possible.

The Government has also slapped a 12c charge on every ATM transaction in a bid to get people to stop filling their wallets with cash - an ironic move, perhaps, as the state had been one of the biggest users of cheques in the EU. Last year government departments and local authorities stopped using cheques and moved on to online payments. The new ATM charge will come into effect on January 1.

A cashless society moved a step closer this week with the news that Cork is hoping to become the first cash-free city in the country as it begins a three-month pilot project to encourage consumers to transact electronically. The 'Cork Cashes Out' scheme is being supported by the banks and many retailers, and while it's entirely voluntary, the public is being incentivised by having the chance to win a series of prizes if using their credit or debit card in participating stores over the duration of the experiment.

The initiative is being driven by the Cork City Centre Forum - an umbrella group representing retailers and business owners as well as city council, gardaí and Cork Chamber of Commerce. The forum was established last year to identify and implement opportunities to drive footfall and business in the city centre. Forum member Paul Montgomery says if embraced by the public, it would mean less cash floating around.

And, on Wednesday, Bank of Ireland gave its clearest indication yet that it wants its customers to use cards to transact more often when it said its tellers would not be facilitating cash withdrawals of under €700. Furthermore, cash lodgements of sums up to €3,000 will have to be done in the bank's dedicated lodgement ATMs and not in-branch.

With increasing numbers of consumers choosing to use internet banking, especially in the wake of improved mobile interfaces, the changes will make little difference. But moves to a cashless society are of concern for those who represent the more vulnerable in society.

Justin Moran of Age Action Ireland says a significant number of older people are not comfortable with internet banking and rely on cash to go about their daily business. "Advancements in technology are fine as long as people who want to continue to use cash are not left behind," he says. "Some older people do not have credit or debit cards and are managing just fine with cash. If they're not comfortable with mobile technology, for instance, they can feel excluded from these new developments."

The agency runs a number of Age Action charity shop and will continue to facilitate people who want to use cash, irrespective of how cashless Ireland becomes in future. "It's important that we continue to give people the choice," he says.

Meanwhile, John-Mark McCafferty head of social justice and policy at St Vincent de Paul, says moving towards a cashless economy presents problems for the poorest in society. "More than 10pc of Irish adults do not have a bank account and subsequently don't have a credit or debit card. It's important that such people are not excluded from any future developments and should be able to use cash and not be penalised for doing so."

He is dismayed by the Bank of Ireland move. "We, the taxpayers, bailed out the banks and this step is something that goes against the spirit of the help given to them then. The banks need to do more to facilitate simple bank accounts for those people who have a limited source of income."

McCafferty is also concerned that a cashless society would make it more difficult for people to keep track on their spending. "If you have a certain amount of cash at your disposal, you can keep track on what you spend easily because it is a tangible thing. With the best will in the world, it's not nearly as easy with a debit or credit card and people can find they end up spending far more than they anticipated. Whatever about people with plenty of disposable income, it's a real problem for those who don't.

"A less-cash society, rather than a fully cashless one, is the future we would like to see."

But the banks here are keen to look towards Denmark - which plans to be cashless next year - rather than Italy, where there has been huge resistance to electronic banking and where coins and notes still rules.

While retailers here, especially in the cities, may be pleased with the take-up of card and phone payments, Ireland has a long way to go before it becomes as cashless as Sweden. So far down the road are the Swedes that banks there have jointly developed a smartphone app, Swish, which allows the repayment of debt to a friend - with no cash changing hands. Another app allows drinkers to buy beer at bars without queueing. And the Stockholm metro is now fully cashless, something that must baffle tourists who hope to pay for tickets at machines with krona.

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