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  1. Analysis
December 4, 2019

Ireland: International digital challengers accelerate cashless drive

By Evie Rusman

Although cash accounts for 43.7% of total payment transaction volume in 2019, Irish consumers are increasingly using their payment cards to make purchases. This is highlighted by the fact that card payments volume recorded compound annual growth rate (CAGR) of 19.7% between 2015 and 2019. This can be attributed to the government’s and banks’ efforts to drive card usage, including the e-Day initiative, higher contactless payment limits, charges on ATM withdrawals, and growing acceptance of payment cards among retailers.

The launch of digital financial services providers such as N26 and Revolut has seen Irish consumers increasingly turn towards low-cost channels such as mobile and internet banking, resulting in increased use of electronic payments.

Contactless card usage has also seen healthy growth in the past few years, with the vast majority of contactless users seeing these cards as helpful. Indeed, widespread adoption of contactless payments – backed by strong contactless infrastructure – is anticipated to further drive electronic payments.

A wide range of alternative payment brands (covering e-commerce and mobile proximity payments) are available, including the likes of Apple Pay and Google Pay. However, there are some notable areas of weakness in the market. The mobile proximity payments market in particular remains still underdeveloped.

Debits cards 

Debit cards remain the preferred payment card in Ireland, accounting for 80.2% of card payment transaction value in 2019. The high adoption of debit cards is supported by the country’s strong banked population, as well as the proliferation of bank accounts issuing debit cards as standard.

In addition, the continued shift away from cash payments in favor of debit cards resulted in a significant increase in the frequency of debit card payments, which nearly doubled from 111.3 times per card per year in 2015 to 211.0 in 2019 – far more than credit cards. Banks also offer reward points on debit cards, which helps boost usage.

Contactless payments 

Contactless payments are rapidly growing in Ireland, with all of the major banks now offering contactless cards. According to Banking & Payments Federation Ireland’s (BPFI’s) Payments Monitor report, in H2 2018 the number of contactless payments rose 60% year on year to 195 million, valued at over €2.5bn ($2.86bn). There were around 4.6 million contactless debit cards and 1.3 million contactless credit cards in Ireland as of H2 2018. To further boost uptake, the government increased the contactless payment limit from $17.18 to $34.37 in October 2015.

E-commerce growth 

The e-commerce market registered robust growth, increasing from $6.68bn in 2015 to $9.51bn in 2019 at a CAGR of 9.2%. This growth was largely driven by growing internet and smartphone penetration. Online shopping events such as Black Friday and Cyber Monday have also helped boost e-commerce sales. Credit cards are the most widely used payment method for online transactions, followed by debit cards. However, alternative payment solutions such as PayPal, Visa Checkout, Google Pay, and Masterpass are increasingly being used for online purchases.

Prepaid market on the rise

The prepaid card market recorded CAGRs of 8.0% and 6.9% in terms of number of cards in circulation and transaction value – a trend that is anticipated to continue over the next few years.While banks in Ireland focus on promoting debit and credit cards, non-banking companies such as SWIRL and An Post focus on the prepaid card market. Ireland-based prepaid card company SWIRL offers three variants: SWIRL Mastercard, SWIRL Gift Card, and SWIRL FX Card.

Card acceptance at POS terminals 

In line with the strong growth in the number of POS terminals, card payment volume and value registered CAGRs of 19.7% and 12.2% respectively between 2015 and 2019. This trend is anticipated to continue over the coming years. With card-based payments on the rise, service providers are offering mobile POS terminals. AIB offers Clover Flex portable POS terminals. Using the solution, merchants can accept all types of card payments, manage stock inventory, and build loyalty programmes.

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