€1bn boost to economy as consumers switch from cash to debit cards

16 Aug 2011

A €1bn boost to the Irish economy has been recorded as Irish consumers are changing their payment habits and are switching to debit cards from cash for making more low-cost, convenient electronic payments through online banking channels.

This was confirmed by payment statistics released earlier today by the Irish Payment Services Organisation Limited (IPSO). Furthermore, consumers in Ireland use ATMs more than those in any other EU country, making an average of 40 withdrawals, totalling almost €5,000 per capita, in 2010.

Some €1bn per annum is reputed to be the potential boost to the Irish economy of a significant switch to electronic and card payments.

“The fact that there is a clear trend towards greater usage of debit cards is a sign that Ireland is embracing a new era in consumer transactions and it will come as a boost to retailers and businesses across the country as the speed and efficiency of payments improves,” said IPSO chief executive Pat McLoughlin.

“It is essential that Irish consumers continue to take the lead from their European counterparts in switching to more efficient payment methods as this will positively impact on Ireland’s economic competitiveness.”

Ireland still lags behind Europe on non-cash transactions

Electronic payments which are faster, more efficient and more cost effective are vital in the current economic climate. Yet Ireland still lags behind its European counterparts with the value of all non-cash transactions totalling 36pc in 2010.

Although rising, this remains in stark contrast to the EU average of 96pc, as consumers on the continent have for many years been using more cost-efficient and streamlined payment methods.

Another notable trend is the increase in the number of people using internet banking services over the past four years, with more than 2.8m customers now registered for online banking. IPSO recently reported that customers made 10.7m online payments in Q1 2011, a 17.3pc increase on the same period last year.

Although still one of the highest users of cash in the EU, at least as measured by ATM withdrawals on a per capita basis, the volume of cash being paid out of ATMs in Ireland dropped by more than €3bn to €22.3bn in 2010. The number of new debit cards issued exceeded 330,000 in 2010 to bring the total number now to 3.4m.

Even allowing for the economic downturn, there does appear to be a shift away from cash to debit cards for day-to-day purchases. While the rise in online purchasing is having some impact, debit card usage continues to grow in popularity, with more than 200m transactions in 2010, now exceeding the number of ATM withdrawals.

The total spend on cards in Ireland last year was €22.8bn – now exceeding the value of ATM withdrawals (€22.3bn) for the first time. Figures for the first half of 2011 indicate the continued rise of card usage and decline of ATM withdrawals.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years