THE GOVERNMENT SHOULD preemptively legislate to ensure that cash continues to be accepted by certain sectors and businesses, according to the new retail banking review.
While much of the focus of the new report has been on bankers’ pay and bonuses, the report looks at the wider banking landscape in Ireland.
It raises the concern about the acceptance of cash into the future due to the trend of digitisation of banking.
The review found that in Ireland, consumers are already being impacted by some businesses refusing to accept cash. These challenges range from minor issues such as the inability to purchase a coffee in a café, to being unable to seek insurance from some companies that do not accept cash.
“People who only use cash therefore have less choice and may not be able to access more competitive products or services where the provider only accepts electronic payments,” notes the report.
The authors of the review state that there is a case for policy or pre-emptive legislative actions to protect acceptance of cash in specified circumstances.
Supermarkets and public bodies
Risks could arise should retailers such as large supermarket chains and other public and private service providers, such as doctors or hospitals decide to not accept cash, the report says.
It says that without retailers and other merchants accepting cash, then it risks the cash system grinding to standstill.
Currently, Euro notes and coins have the status of legal tender in Ireland, meaning that retail transactions are governed by contract law. In the context of this, where a business places no restrictions on the means of payment it is prepared to accept, it must accept legal tender when offered by a customer.
However, if a business specifies in advance of a transaction that payment must be in a form other than cash, the customer cannot subsequently claim a legal right to pay in cash, even if that cash is legal tender. This can be achieved, for example, by displaying signs at the cash till and at the store entrance.
The report recommends that the Government legislate preemptively to give the Minister for Finance the power to require certain classes of firms, sectors or sub-sectors to accept or facilitate the acceptance of cash.
In particular, the report states that it should be Government policy that public bodies should accept or facilitate the acceptance of cash for the payment of goods, services, taxes, levies, fees or charges.
The reviewers also note that other jurisdictions, such as the United States, are currently debating whether to legislate for the acceptance of cash.
Branch closures
The report gives a clear warning that the move towards digitisation of the banking sector will result in a downscaling of bank branches and access to cash for some,
It states that trends seen over the last decade, such as the increasing digitisation of the sector and the further decline in the use of cash, “will continue and the issues arising from these trends, including fewer ATMs and reduced branch networks, are already issues that we see today”.
During the summer, outrage was sparked in rural areas when AIB announced that it was planning on removing cash and cheque services from certain banks.
The bank u-turned after the Taoiseach called on it to reconsider, stating that banks had obligations under a social contract, and while it appears we are moving towards a cashless society, significant cohorts of people, businesses and towns across Ireland still use cash.
A number of TDs raised concerns about the closure of bank branches in their areas. Cork TD Michael Collins again repeated the concerns to the Taoiseach in the Dáil yesterday in light of the reports publication.
“I raised the closure of Bank of Ireland banks in Bantry and Dunmanway and post offices such as that in Goleen in west Cork, but nothing has happened. They closed. Castletownbere, Dunmanway and Kinsale banks almost went cashless under the Taoiseach’s watch,” he added.
Following the departure of Ulster Bank, the bank branch network in Ireland has reduced
from 617 branches in June 2020 to 438 branches in September 2022.
Of the remaining bank branches, 21% (92) will have no staffed cash counter, though nearly all have an ATM inside or outside the branch, or both.
The number of bank branches per 100,000 of population is 8.63 in Ireland,
whereas in June 2020 it was 12.93.
This compares to UK 10.4; New Zealand 21.4; Netherlands 7.0; Portugal 32.8; Lithuania 10.5; Finland 4.0; and Canada 20.2.
In a bid to map a way forward with the use of cash and further digitisation of the sector, the banking review calls on the Department of Finance to lead on the preparation of a new National Payments Strategy, which it says should be ready in 2024.
The strategy should set out a roadmap for the future evolution of the entire payments system, taking account of developments in digital payments, the use of cheques and other issues, and guide how future changes should be made.
Access to Cash legislation should also be prepared by next year – this will require banks to set out “reasonable access to cash” criteria to preserve access at December 2022 levels.
Speaking on RTÉ’s Six One News yesterday evening, Finance Minister Paschal Donohoe said the heads of the Bill will be done in 2023, stating that the Government wants to look at the economy, see what are the right levels of access to cash and put it on statutory footing. The minister said that work would be done next year.
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