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Irish consumers returning to using cash, with bigger and more frequent ATM withdrawals 

Irish consumers are making a return to using cash in the wake of Covid, with bigger and more frequent ATM withdrawals recorded. 

That’s according to new research from the Central Bank, which found that the average amount of cash taken out each time someone uses an ATM has begun to rise, something which has been attributed to higher prices.

During the Covid crisis and associated restrictions, cash withdrawals decreased, with people being advised to use contactless payments instead of using cash, amid fears of spreading Covid.

During lockdowns, there was also a huge increase in shopping done online, with non-essential businesses forced to close, and people wanting to avoid in-person contact with others. 

However, some of the Covid-inspired shifts to using cards, particularly the use of contactless payments, appear to have become a permanent fixture. 

This is evidenced in figures from the Central Bank which showed that point-of-sale payments made by debit cards across Ireland increased from €3.4 billion in February 2020, before Covid lockdowns were enforced, to €4.9 billion by February 2022.

Figures reveal that prior to lockdowns, Irish consumers had collectively withdrawn €1.5 billion from ATMs nationwide every month. However, this plummeted by a third to €1 billion during Covid lockdowns. 

The research, published in a letter from the Central Bank on Thursday 13 October, stated that demand for cash in June of this year was 7% higher than it was in September 2021, which, according to the Central Bank, “suggests consumers are withdrawing larger amounts in response to inflationary increases”.

That finding, from the paper which examined changes in the volume and value of monthly ATM withdrawals, is indicative of the value of withdrawals having increased in line with rising rates of inflation. 

The research also stated that the number of withdrawals at ATMs has been on the up since January of last year. 

The new study by Central Bank economists also shows the number and value of ATM withdrawals began to rise again when restrictions were relaxed. According to economists, this indicates that Irish people still have a strong attachment to using cash, despite some businesses adopting a ‘contactless payments’ only policy permanently.

The research paper, written by David Cronin and Niall McInerney for the Central Bank, said that while card payments have increased in recent years, “a steady demand for ATM cash transactions remains clear”. 

The paper comes after Allied Irish Bank (AIB) reversed its move to go cashless in July, a proposal which sparked outcry from local people and the Rural Independent Group of TDs in the Dáil.

AIB, one of Ireland’s largest commercial banks, had announced a decision to make 70 of its branches cashless, mostly in rural locations.

In a statement released on 22 July 2022, the bank said that: “recognising the customer and public unease that this has caused, AIB has decided not to proceed with the proposed changes to its bank services.” It followed calls from the Rural Independents, including Mattie McGrath, Michael Collins, and Danny Healy-Rae, to reverse the controversial decision.

A ‘Keep Cash Alive’ movement, spearheaded by Lawyers for Justice Ireland has emerged and appears to have gained traction in recent months, with more businesses introducing preference-for-cash policies in response to a crackdown on cash payments from businesses who have gone contactless.

Last month, a popular crêpe restaurant in Co. Wicklow won praise after its owners offered a discount to customers paying in cash as part of its support for the nationwide movement to reignite cash. 

The traditional French crêperie explained its decision, saying it had introduced the incentive because customers pay a transaction fee to the bank “for every tap”, and also in its bid to ‘support cash freedom’. 

Meanwhile, other businesses, including Center Parcs UK and Ireland, have adopted a policy of card-only payments.

A survey by BOI Payment Acceptance (BOIPA) reported that the general increase in cashless payments as opposed to cash transactions is perceived positively by almost two thirds of businesses nationally. 

However, the push to go cashless has left Irish businesses split over whether they anticipate becoming fully cashless in the next decade, with 47 per cent believing this is not a real possibility.

The new study from the Central Bank also makes reference to research commissioned by the Department of Finance from April of this year, which found that one in five Irish adults prefer to pay with cash in stores. The research also found that 73% of adults in Ireland still use ATMs on a regular basis.

Reasons for a preference include the belief that cash protects the privacy of its holder, it allows money to be held in person as opposed to in a bank account, and it assists in budgeting as it makes it more difficult to overspend.

Older age groups, those classed as working-class, and people living in rural areas, all have a heavier cash usage when it comes to making payments, the Central Bank said.

The Central Bank said that the number of monthly ATM withdrawals has been on the increase since January 2021, when there were 5.23 million withdrawals, which increased to 7.95 million in June 2022.

Before the onset of Covid, the average ATM withdrawal ranged from €130 to €135. By June 2020 and May 2021, the average withdrawal range sat between €148 and €161. The Central Bank said the increase was down to fewer withdrawals being made, and more money being taken out with each withdrawal.

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