A vision of a digital Dublin where electronic transactions surpass cash is coming true, Visa’s Philip Konopik tells John Kennedy.
Dublin stands to gain €1.35bn per annum if all the benefits of consumers, businesses and government transitioning to an achievable level of cashlessness were added up, according to Visa Ireland country manager Philip Konopik.
A recent global study by Visa ranked Dublin among the most digitally advanced on Earth. The city and its surrounding suburbs, with an estimated population of 1.2m people, have a GDP of $86.1bn a year.
‘The majority of payments in Ireland today, in terms of value, are by digital’
– PHILIP KONOPIK
The Visa study, which took in 100 cities around the world, analysed the various costs and benefits of both digital and physical payments across the cities. It calculated that by going cashless, each city would on average achieve the equivalent of a 3pc increase in GDP.
Dublin and the future of money
Specifically for Dublin, moving to a more cashless economy where digital payments by card, phone and wearables exceed cash payments, the estimated benefit would be €1.35bn yearly.
For consumers, this would be a €900m gain in benefits and for businesses, it would be a €720m gain. Meanwhile, for Government, €540m a year would be gleaned through less administration, less crime and removing the grey economy.
According to Konopik, the majority of payments by value in Ireland are digital, but by volume are cash.
“Today, we estimate that 35pc of consumer expenditure by value is still by cash, with another few percent by cheque. The rest would be by electronic transfers or by debit or credit cards.
“The majority of payments in Ireland today, in terms of value, are by digital.”
However, by volume, cash is still king, accounting for the majority of transactions below €10 in the Irish economy.
Konopik said that the transition from this is already underway thanks to contactless payments bringing about the ‘tap it’ culture at point of sale.
The onset of the Leap card is also having an impact, and eventually it too will transition to users simply tapping for tickets with their debit or credit cards, as is happening in the UK with the eventual phasing out of the Oyster card in favour of contactless payments.
“In terms of the future of money, even facial ID could become a factor in enabling seamless, frictionless travel. It really comes down to things like identifier technology.
“The National Transport Authority has ambitious plans for the future of transit in Ireland. Part of its €750m Bus Connect plan will include contactless payments using debit or credit cards. That’s the endgame.”
When it comes to the €1.35bn annual savings for Dublin by going cashless, the economic impact over 15 years translates into a 1pc increase in employment, a 0.2pc increase in annual wages, a potential 17.8pc hike in GDP and an overall 0.1pc increase in productivity.
“About €540m of that would include an increase in tax revenues, removal of the grey economy through electronic payments, cost savings for administrative efficiencies, and increased economic costs and efficiencies from criminal justice related to crime.
“As the cash economy shrinks, that will in turn shrink the black and grey economies, and, as they increase, the wider societal benefits will increase because the State won’t have to spend money on tackling crime or the administrative cost of cash in the system.”
But there will be frictions and this is where new fintech opportunities such as peer-to-peer payments will play a role.
“Most people pay their plumber or carpenter by cash but, as cash declines, we need to create replacement solutions.”
He also said for businesses, the dangerous old days of waiting for the ‘cheque in the post’ will be eradicated by the movement to dynamic payment platforms.
“We are introducing a new technology in the Irish market called Visa Direct that enables card transactions between consumers.
“Effectively, we provide the rails, the infrastructure. And, in the UK, for example, Facebook has launched a peer-to-peer payments service using Messenger.
“Looking to the Irish market, we are looking to accelerate that trend. These solutions are coming at a pace. The next 24 months will be interesting in terms of the speed of evolution of payments technologies.
“And Ireland is stepping up to the plate,” Konopik concluded.