September 19th marked a significant milestone in the gradual movement of Irish society away from cheques towards electronic payments. e-Day is part of the National Payments Plan (NPP), a Government initiative to help Irish people make fewer payments by cash and cheque, and use cards and e-payments instead. e-Day (September 19th) marks the day when the public sector stops using cheques in its dealings with businesses.
This part of the NPP will be followed by other campaigns bidding to create savings to the Irish economy of e1bn per year as we embrace more efficient payment services. The trend is in that direction anyway. Last month, the Central Bank published the findings of its latest analysis of cheque usage in Ireland. It is projected that 61 million cheques will be used in Ireland in this year, down from 69 million in 2013 and from 132 million in 2005.
The research showed that businesses are retiring their chequebooks at a faster rate than consumers. Cheques issued by businesses will be an estimated 28 million in 2014, down from 33 million in 2012, while consumer cheques reduced from 26 million in 2012 to an estimated 23 million in 2014. So it’s clear from the research that cheque-usage in Ireland is steadily declining, and businesses are abandoning cheques faster than consumers.
e-Day will add to this momentum. The logic of using e-payments instead of cheques is clear to most people. Electronic payments are quick, safe and low-cost while cheques tend to be considerably more expensive and can create cash flow problems, especially for small businesses; literally a ‘cheque is in the post’ culture.
Despite this, some Irish people still prefer to use cheques when making payments, and often for good reason. Some parts of our country have poor internet coverage, and there is still a sizable portion of our population who are not computer literate. There are many people who feel that if the cheque payments system ain’t broke, then there is no need to try to fix it.
It for these reasons that the NPP has decided not to target consumers. e-Day relates to business cheques only. That said, it is hoped that e-Day will provide a catalyst for broader consumer migration towards electronic payments. With e-Day upon us it is important that your council, department or public sector body is prepared for the changeover.
Have you informed your suppliers that you will no longer pay for their goods by cheque? Have you asked them how they would prefer to receive payments, and gathered the particular BICs and IBANs where appropriate?
Have you informed your business customers that you will no longer accept their cheques? They will need to know how you prefer to receive payment. Your website and literature should be updated to explain your preferred methods of payment. While it is recognised that the transition will have an initial impact for both payers and receivers of cheques, ultimately the switch to electronic payments will deliver considerable benefits both to the public sector bodies as well as the businesses they deal with.
By Ronnie O’Toole, NPP Programme Manager.