6. Acceptance of cash
6. Acceptance of cash
As outlined in Section 5, the NPS will examine the evolution of access to cash by evaluating the criteria set out in the forthcoming Access to Cash Heads of Bill. Of course, once cash can be accessed by consumers, they need to be able to use it. With that in mind, the NPS will look at the acceptance of cash across the economy.
Euro banknotes and coins are legal tender in the euro area, with cash being the only form of central bank money to which everyone can have direct access to currently. Cash remains the dominant form of payment at PoS[1] in Ireland, albeit a lower proportion of total transactions in Ireland compared to the situation as it was at the time of the NPP in 2013. However, given the important role of cash in the economy and the wider society, it is important that this means of payment be protected to ensure continued trust in the cash cycle to protect the more vulnerable in society and to facilitate those who select to use cash on a frequent basis for a variety of reasons.
It is also of strategic importance to maintain cash acceptance (and thus associated infrastructure) at an adequate level in order for cash to continue to function as a fall-back in the event of a contingency scenario. Cash can be used in many transactions multiple times without each transaction necessarily being recorded, for example peer-to-peer transaction. It is worth noting that according to a 2021 ECB survey[2], 95% of businesses in Ireland accepted cash as a payment method and 98% of these businesses say they will continue to do so in the future. Acceptance of cash by businesses is high though it is of interest that when confronted with a choice consumers are increasingly selecting to pay by via digital methods for a variety of reasons.
For the majority of people, the use of cash is primarily a preference as opposed to the sole means of payment available given that 92.8% of households in Ireland now have access to a current account[3], the vast majority of which would have an associated debit card that can be used for digital payments, including online transactions, up from 80% in 2009[4]. Given the increasing digitalisation of many aspects of people’s lives, particularly since the Covid-19 pandemic, digital payments have increasingly become the norm for many people making everyday purchases. In 2021, the EBA, encouraged all PSPs to allow an increase in the contactless maximum amount to €50, this coupled with earlier legislation which placed a cap on interchange fees for card payments resulted in cards being used far more by consumers.
Currently, the right to use cash in Ireland as a means of payment is based on contract law. In this context, where a business places no restrictions on the means of payment it is prepared to accept, it must accept cash as legal tender when offered by a customer to settle a debt that has arisen in the provision of goods or services to them. If a business specifies payment must be in a form other than cash, the customer cannot subsequently claim a legal right to pay in cash. This can be achieved by, for example, placing a sign stating, “cash not accepted” or “card payment only” at the entrance to the retail outlet or check out area. In this regard, it would be an ex-ante measure ensuring that the customer is fully aware of the situation before they make a transaction.
Across the EU there is a range of approaches on the right to use cash for payments, that are a function of culture and history, and most Member States do not have specific national provisions[5] for legal tender status as such. However, several countries rely on definitions found in other pieces of national legislation, for example in central bank acts/statutes, tax codes, civil codes or criminal codes.