Monday 19 March 2018

If cash is king, are online payments an abortive coup?

Stack of euros
Stack of euros
Charlie Weston

Charlie Weston

ATTEMPTS to wean us off our high use of cash, and make more electronic payments, are doomed to failure.

We lag the rest of Europe when it comes to the use of electronic payments.

Regulators, the Government and banks all want us to cut our use of cash in favour of debit and credit cards, and online payments.

Well, it ain't happening. And you can blame the banks for that.

Cash is the most popular payment option in this country. It is followed by Laser/debit cards, direct debits and then online payments options like PayPal. Credit cards and cheques are near the end of the list of preferred payment methods.

The efforts to get us to use fewer coins and notes come from the National Payments Plan, an official committee charged with getting us to use less cash in favour of electronic payments. The lead role in this organisation is taken by the Central Bank, but it also involves the Department of Finance and the banks.

If we used less cash, it would be cheaper for the economy and for banks.

AIB and Bank of Ireland are represented on the steering committee.

It might be better if they were not.

Because one of the main reasons we remain so attached to using cash is because we distrust our banks and would prefer to have "readies" in hand rather than incurring charges for using debit cards linked to our current accounts.

The Central Bank has produced some interesting research, with the help of Millward Brown Lansdowne, into our payment preferences.

It found that cash was the method favoured by consumers, and people do not want to use electronic payments because it is very hard to avoid bank charges attached to these.

Bank fees and charges are not clear to people.

And people feel it is their money and they should not be charged by their bank for handling it and spending it.

Fees of between €30 and €35 a quarter were found to be the norm, by the research.

The old Laser card has now been phased out and has been replaced by Visa and MasterCard debit cards.

But retailers said the new debit-system was more expensive for them when processing payments and warned that this will eventually lead to higher prices in shops.

The debit cards issued by AIB and Bank of Ireland have a feature that allows them to be used for contactless payments. This involves waving the card in front of a terminal and not entering the personal identification number (PIN) for purchases of less than €15.

Banks are not charging at the moment for contactless payments. But they will.

No wonder cash is king. If we can avoid high-charging banks, then we will keep using notes and coins.

Twitter: @Cweston_Indo

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