BY JOHN ELLIS, FINANCIAL ADVISOR
Is cash on the way out? Last August in the UK, cash was in such short supply that the Treasury moved to protect public demand for physical money by announcing that banks would be fined for failing to provide free access to cash withdrawals for consumers and businesses.
Recently I went to the cinema and was not allowed to pay by cash, card only, and the other day I went to another place of business and was refused the facility to pay by card, cash only. So who was right? Both seemingly. According to some on-line media streams you can demand the facility to pay by cash and the business must allow it – that is incorrect.
The consumer’s right to use cash “is rooted in contract law, ensuring that businesses must accept legal tender when offered by customers to settle debts which is in line with Article 128 of the Treaty on the Functioning of the European Union and Council Regulation no 974/9”.
What this means is if you have a debt and you wish to settle that debt using cash, the business entity cannot refuse to settle the debt in that that way and then sue you for your failure to pay your debt.
However, legally, businesses are allowed to refuse cash payments if its clearly stated before a purchase is made which seems to conflict with the Central Bank’s belief that cash plays a crucial role in meeting the financial needs of vulnerable populations and those not digitally active.
In the last 10 years we have witnessed a huge transformation in the way people pay for services. Traditionally the majority were cash transactions but there has been a huge surge in the adoption of electronic payments especially during Covid when people were reluctant to handle cash.
Despite the surge in electronic payments, cash continues to play a vital role in the Irish payment system. Yet the banks seem not to want to deal in cash if at all possible. This is evident in the sale of ATMs to private operators; in 2018, Ulster Bank sold the ATMs they operated under the EasyCash brand to Euronet, while in 2020 Bank of Ireland also sold 700 non-branch ATMs to Euronet and AIB more than 500 to Brinks.
These ongoing changes in the retail banking sector reflect broader challenges faced by the industry. For example AIB wanted to convert 70 branches to “cashless facilities” and sent us off to the Post Office to conduct our cash business. They had to row back after a huge backlash from business groups, consumers, farming and rural organisations and politicians.
A comprehensive review conducted by the Department of Finance in 2022 highlighted 34 separate recommendations that needed to be addressed, including the use and availability of cash. Finance Minister Michael McGrath confirmed plans to introduce new legislation aimed at protecting consumers’ access to cash.
A key aspect of this legislation involves oversight of independently-operated ATMs, which now make up about 60% of the ATMs in the country. These ATM operators are to be – and should have been – authorised and supervised by the Central Bank.
Minister of State with responsibility for Financial Services, Credit Unions and Insurance Seán Fleming, says: “The Government wants a healthy retail banking sector that delivers for the public. To compliment the Retail Banking Review, the Credit Union Amendment Bill was published to help credit unions grow as a key provider of community banking and meet the challenges posed by the changing domestic banking environment.”
Ireland’s journey towards a cashless society is driven by technological advancements, changing consumer preferences, and global trends. As the Government works towards legislation to safeguard access to cash, it faces the challenge of balancing the convenience of digital transactions with the needs of diverse consumer groups.
The coming years will likely see continued efforts to strike a delicate balance, ensuring financial inclusion while embracing the benefits of an increasingly digital economy.
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