The changing payments landscape in Ireland

Spurred on by the pandemic, Ireland’s payments landscape is more digital than ever and our relationship with money will never be the same again, writes BOIPA’s Brian Cleary.

Bank of Ireland Group and EVO Payments announced the extension of their successful marketing alliance under the BOI Payment Acceptance (BOIPA) brand at the end of 2021, continuing a partnership that has championed the customer and supported the exponential growth of card payments in Ireland with the number of debit card transactions alone more than trebling since 2014.

BOIPA’s arrival in the Irish market played a significant role in the widespread adoption of contactless payments in every town and village the length and breadth of the country.

“Ireland has been a leading adopter of non-cash payments in Europe and, within this decade, we could find ourselves at the same level as our Nordic counterparts”

We introduced simple, transparent and innovative pricing plans, making card payments accessible to any business owner starting from the micro merchant up.

The history of money

At the start of the last decade, money as coins, notes and cheques had remained steadfast as the status quo when it came to trade, commerce and social activities. The first instances of notes being used as legal tender stretch back to China in the 10th century, with the modern iteration of what we use today having roots in the 1600s. We are now seeing very tangible evidence that over the last 10 years the rate of innovative and change in the financial technology sector has pushed cash from being ubiquitous to an outlier. The way we make transactions, send and receive money has changed so rapidly that the next generation will not remember the prevalence cash once had.

It’s become the norm for parents, for example, to transfer their children pocket money through person-to-person payments and the growth of pay-by-link (email or SMS) solutions and unattended payment terminals has furthered our journey away from traditional cash scenarios with the simplicity, ease and flexibility these new technologies offer customers and merchants. Innovations like these were only on the horizon back in 2014.

Taking tap for granted and the shift to mobile payments

Our everyday, unconscious practice of tapping for most items is a testament to the Irish retail banks, payment services providers and merchants for adopting new technology to make transactions quicker and easier for customers.

It’s been just over a decade since contactless payments were introduced by the Irish Retail banks for items up to €15 and, admittedly, it took a number of years for contactless to become the standard but there is no sector that can now afford to be without a card machine with contactless functionality.

From sole traders like taxi drivers and tradespeople with mobile payment acceptance devices to larger retail outlets with integrated payment solutions merging in-store and online connectivity, there are a multitude of tailored options to support any business. Today, the once-commonly asked customer question “do you accept card?” has been supplanted with “can I tap?”

While Ireland was already on a journey to utilising more cashless payment options, the accelerated adoption of contactless payments can be undoubtedly linked to the Covid-19 pandemic. December 2020 marked the first time Irish consumers spent over €1bn in contactless sales and the threshold for contactless payments was increased to €50 euro last year. Our neighbours in the UK increased their limit to £100 recently. We may do likewise in the future.

Virtual wallets

Yet, no sooner than we have adopted cards as our default payment tool we are now seeing the physical card disappear into the virtual wallet in our smartphones. The arrival of Google and Apple Pay to Ireland introduced ‘card-free’ contactless payments with the contactless limit no longer required given the built-in security measures on a phone, watch or tablet.

Consumer research carried out by Visa and Red C Research has found that contactless usage is now almost universal and being used more frequently, especially for smaller amounts. The ability to download a disposable, once-off card too, with a temporary card number, is a further security feature that usurps the need to use a physical card when shopping online.

Increase in Irish e-commerce sites and online security features

We’ve seen Irish consumers’ familiarity with online shopping continue on an upward trend since 2014. The shift towards Irish businesses having additional methods of shopping available to their customers has been crucial with over the phone and online payment options complimenting in-person transactions.

While much of this spending has gone on products from overseas, we’re seeing an increase in the number of Irish companies with an online ecommerce presence affording Irish customers more opportunities to ‘Buy Irish’ than ever before. This has been crucial with research from Amarach finding that 82% of customers are now more likely to shop local, either online or instore, compared to 2019.

 Security and regulation has also matched this growth in technology. The prevalence of online fraud has spiked during the Covid pandemic as people have relied more on the internet for shopping and other everyday tasks. Payment service providers, merchants and regulators have faced the challenge of reinforcing eCommerce security, yet without creating obstacles that could lead to cart abandonment and lost business. There have been many positive developments in the decade since the first Payment Services Directive (PSD1) was introduced. Nevertheless, fraud losses continue to rise year-on-year against a background of rapid digital change.

PSD2 was introduced as a response to these changes, bringing regulations and security measures up to date with changes in technology and consumer behaviours. To better protect cardholders from fraud, payment service providers and merchants within Europe now support Strong Customer Authentication (SCA) – the main objective of which is simply to make online payments more secure, thereby reducing fraud levels.

End of the cash era?

There is no doubt over the last seven years that the once undisputed position of cash as the preferred legal tender has ended with the rise of card and digital payment options. Yet, cash too, we must remember, was once the technology of its time over a century ago, with notes replacing heavy coins that were cumbersome to transport and trade. It has taken some time since then for society to transition away from notes and coins but the unprecedented progress we’ve seen since BOIPA entered the Irish market is now happening at full tilt.

While cash payments are becoming less regular they will not disappear altogether. Cash is still popular for transactions under €15 and spend control as well as habit are key factors driving a preference for cash amongst some consumers. We are also seeing evidence of cash’s durability in Sweden, a world leader in cashless payments with just one per cent of Sweden’s GDP circulating as cash. They passed a bill designed to preserve cash within their society to ensure access to money for more cash-reliant demographics and in the event of a natural disaster or cyber-attack.

Ireland has been a leading adopter of non-cash payments in Europe and, within this decade, we could find ourselves at the same level as our Nordic counterparts.  Whether it’s some cash, card or digital as a society we will continue to feel the benefits.

Brian Cleary
As Managing Director, Brian Cleary has overall responsibility for BOIPA, Ireland and UK. Brian held a number of senior management positions throughout a long career with Bank of Ireland. He holds an MSc in Management from UCC and was awarded the Irish Management Institute Distinction Award for 2013.