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Dáil Éireann Debate, Wednesday - 15 September 2021

Wednesday, 15 September 2021

Questions (272, 273, 274, 275)

Alan Farrell

Question:

272. Deputy Alan Farrell asked the Minister for Finance the measures his Department is taking to prepare for a reduced reliance on a cash-based economy; and if he will make a statement on the matter. [43433/21]

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Alan Farrell

Question:

273. Deputy Alan Farrell asked the Minister for Finance the efforts being taken to increase security of electronic transactions and related infrastructure as the economy increasingly moves towards a cashless system; and if he will make a statement on the matter. [43434/21]

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Alan Farrell

Question:

274. Deputy Alan Farrell asked the Minister for Finance if he has discussed the possibility of negative interest rates being passed on to customers by banks in a cashless economy with European partners; and if he will make a statement on the matter. [43435/21]

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Alan Farrell

Question:

275. Deputy Alan Farrell asked the Minister for Finance the long-term view of his Department regarding personal savings in line with overspend trends in cashless economies; and if he will make a statement on the matter. [43436/21]

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Written answers (Question to Finance)

I propose to take Questions Nos. 272, 273, 274 and 275 together.

Over the last decade, we have seen a shift in the way consumers and businesses are paying for goods and banking. While historically Ireland has been a relatively cash-intensive economy, significant progress has been made and a rapid increase in the take-up of electronic payments is evident.

The Covid-19 pandemic has potentially acted as a catalyst for the move towards digital payments and the move away from cash. According to the Central Bank of Ireland’s credit and banking statistics for July 2021, the volume of card transactions, excluding ATM usage, increased by 15 percent compared to July 2020. While ATM withdrawals remain subdued compared to pre-pandemic levels, down 30 per cent on its 2019 monthly average. The latest figures from the Banking & Payments Federation of Ireland show that on a quarterly basis, the volume of contactless payments increased by 62 per cent year on year to 199 million in the second quarter of 2021, with the value rising by 68 per cent to almost €3.2 billion. 

Notwithstanding a significant increase in the take-up of electronic payments, cash remains a vital part of the Irish payment system. A study, commissioned by my Department in 2018, concluded that a fully cashless society would not be an appropriate objective. The Report is available at the following link: www.gov.ie/en/publication/f8bfbe-indecon-report-on-benchmarking-of-irelands-payments-industry/

In September 2020, as part of the EU Digital Finance Package, the European Commission published the Retail Payments Strategy. One of the key aims of the strategy is to maintain access to and acceptance of cash across EU Member States. The strategy recognises the importance of ensuring that there is continued access to cash and that the increased use of digital payment methods does not lead to financial exclusion.

The Commission aims to further develop the European payments market so Europe can fully reap the benefits of innovation and opportunities that come with digitalisation. Consumer protection is a key part of this work, in order to create safe payment solutions where risks are monitored and mitigated effectively. One element of this is the introduction of strong security requirements for the initiation and processing of electronic payments, which apply to all payment service providers. Payment service providers are now obliged to apply strong customer authentication (SCA) when a payer initiates an electronic payment transaction. SCA requires the customer to go through two-factor authentication made up of elements from two of three separate categories: knowledge, possession, and inherence. This approach is intended to reduce the risk of fraud for all types of electronic payments (especially online payments) and to protect the confidentiality of the user’s financial data.

I have no role in the day to day operations of any bank operating within the State including banks in which the State has a shareholding. Decisions in relation to commercial matters such as the application of interest rate charges are the sole responsibility of the board and management of the banks, which must be run on an independent and commercial basis.

Key lending and deposit rates are set by the Governing Council of the European Central Bank (ECB)having regard to its monetary policy objectives. The application of negative deposit rates by the ECB has resulted in European banks incurring a consequent cost on deposit accounts held with the ECB. Banks across Europe have looked to pass some of the costs associated with negative rates to deposit holders with larger balances, the Irish banks are no different in this regard.

My Department will continue to monitor develops in this area to ensure that consumers have access to a broad range of reliable and innovative services that meet their needs.

Question No. 273 answered with Question No. 272.
Question No. 274 answered with Question No. 272.
Question No. 275 answered with Question No. 272.
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