The Irish Government sanctioned and released the Access to Cash legislation in January with the intended aim of developing a strategic system to address potential alterations to the cash infrastructure with the changing cash needs in the future. This legislation intends to preserve citizens’ access to money currently and in the years to come by maintaining the cash infrastructure at the level that was set in December 2022, and revisiting the regulations regularly from then on.
The legislation is envisaged to lay the groundwork for dealing with prospective fluctuations in cash demands in an orderly, transparent, fair, and equitable manner. Currently, there is an absence of a legal framework to handle these modifications and the level of access currently enjoyed is somewhat fortuitous.
Retail banks collectively hold approximate deposits of €137 billion derived from consumers and small businesses. With the lion’s share of household deposits being managed by three retail banks, it consequently appears rational that these institutions should bear the ultimate burden of maintaining cash infrastructure.
While An Post plays a part in the resolution, it should not be forgotten that unlike retail banks, it does not hold anyone’s cash, merely acting as a go-between for other parties including the State.
The legislation under discussion permits elasticity to incorporate other participants in the future, such as individual credit unions, on conditions such as amassing enough market share in deposit levels and the quantity of active accounts. This pliability allows room for other contenders to be charged with guaranteeing fair and effective cash access, thereby reducing the risk of potential barriers to new entrants in the Irish market.
An Post, with existing agency partnerships with two of the three retail banks, offers banking services in multiple locations around the country, especially in areas where banks no longer have branches. This service includes the facility to deposit and withdraw money from a consumer or business bank account.
These agency partnerships are indeed welcomed; however, An Post’s core function remains to provide postal services, distribute social welfare payments and provide access to State Savings. Just as with the retail banks, it must be remembered that An Post does not keep hold of anyone’s cash, it merely stands as a representative for others, including the government.
While An Post doesn’t hold household deposits, the close to €16 billion in such deposits is spread across 191 functioning credit unions, a stark contrast to the €137 billion split between a handful of banks. Each of these 191 credit unions operates independently and under a shared agreement, unlike the three key high street banks (AIB, Bank of Ireland, and PTSB).
Preserving the cash infrastructure at the levels of December 2022 is as vital as ensuring that these facilities work effectively for the benefit of citizens. Merely rolling out a cash access plan serves no purpose if the machines malfunction.
Isn’t it frustrating when one has to search for a working ATM or when only high-value banknotes are dispensed? This could potentially cause inconvenience or frustration to many. However, one can’t ignore those who might not have €50 in their bank account and are waiting for their week’s wages or their upcoming benefits payment.
Since 2020, it’s noteworthy that large portions of the ATM networks owned by domestic banks were sold off to third-party operators, with most of the network now overseen by independent operators.
The new legislation will obligate these independent ATM providers to register with the Central Bank of Ireland for the first time, allowing the Central Bank to impose service standards, operation hours, and requirements for maximum downtime and denomination stocking.
Throughout the creation of the Access to Cash Bill, industry engagement has been crucial, involving those from all walks of the cash cycle in Ireland, from high street banks, independent ATM providers, to cash transit companies and the Central Bank.
Unless a drastic increased need for cash occurs in Ireland, the likelihood of the requirement for substantial additional infrastructure due to this law seems slim.
The Banking & Payment Federation of Ireland’s (BPFI) announcement that it fully supports “continued access to cash” and “the development of a framework to manage this access”, is a significant and highly favourable development.
The Banking & Payments Federation Ireland (BFPI) is conveying worries over its members potentially facing fresh, unmeasurable expenses, which might ultimately spike the cost of everyday banking services. Unless there’s a substantial increase in the demand for cash in Ireland, it’s unlikely that the new legislation will necessitate big-scale extra infrastructure.
The BFPI and its members have been persistently encouraged by myself and my team to seek collaborative strategies to minimise the future cost of complying with the law. This is a common approach in several countries, including the United Kingdom, Sweden, and the Netherlands.
The consumption of cash in Ireland has been on a downward trend for the past ten years, with a parallel uplift in card transactions, and more recently, an increase in payments made through mobile phones or smart wearables. Nonetheless, there’s an ongoing necessity and demand for cash access in the future.
The future changes in the levels of cash usage will be managed in a fair, systematic, transparent, and equal manner, thanks to the Access to Cash Bill’s robust framework.
The current Minister for Finance is Michael McGrath.
– Once you’ve signed up for our Business alerts, you’ll have top-tier news, analysis, and commentary delivered straight to your phone
– Stay current with The Irish Times on WhatsApp
– Inside Business, our podcast, gets released every week – check out the most recent episode here.