This week Deirdre O'Shaughnessy speaks to Dr Ronnie O'Toole, Chief Economist with National Irish Bank, about the Irish dependence on cheques and cash, which currently costs our economy approximately €1 billion every year.

Dr O'Toole, who is coming to Galway on Wednesday, 11 June, to speak to a seminar on how businesses can save in the current economic environment, freely admits that this issue is a 'hobby horse' of his.

"As a country I think we have shown ourselves to being very innovative in many of our economic and social policies. When I see an 'open-goal' like this it frustrates me, as I know we could reform this in the space of a couple of years, and within five years most of the population would have forgotten how to write a cheque. The Irish population transferred to the Euro in days - we simply accepted the change, and queued up to have our punts transferred to euros. We can do the same with cheques. In any case, we can't constantly complain about living in a high cost economy, and then insist on retaining high cost habits such as cash and cheques."

His frustration is clear. But this is an issue that nobody appears to be concerned about. Many Government departments, a lot of workplaces, and some retail outlets deal in cheques almost exclusively, while it can be hit or miss when attempting to pay with credit or debit cards in retail outlets.

According to Dr O'Toole, "the average annual cash withdrawal per consumer in Ireland is well above the European average, while the number of ATM terminals has more than doubled in the three years from 2003 to 2005." Unlike many other countries, Ireland shows little signs of moving to more efficient payment mechanisms.

Cheques also account for a large percentage of our transactions, compared to other countries. A quick analysis of the figures shows that half of all households pay their ESB bills by cash or cheque, despite significant developments in online banking and a major campaign by the ESB to promote the use of direct debit.

"In fact, cheque usage in Ireland was running at 32 cheques per capita in 2005, up from 31 in 1996," says Dr O'Toole, while 11 other European counties have a cheque usage of less than one per cent of all transactions.

"Studies estimate that a migration towards an electronic system could save Ireland over €1 billion annually. These savings would not only accrue to businesses and consumers, but also the government - notes and coins are expensive to mint, and make black-market activity easier," he explains.

Of course, there are certain barriers to making the move to electronic payment systems. The major one is broadband. Although the Government is due to roll out the National Broadband Scheme this month, there are still large swathes of rural Ireland without any broadband internet access.

In terms of Government action, there is a lot more to do than just broadband, however.

"The main thing the government could do is change the way it does its own business. The Government is one or both parties to up to half of all cheques in the system, and as such could drive change in this area. Think of the Revenue Commissioners, Local authorities, semi-states etc. It is very difficult for a business acting alone to change the way it does business if other suppliers and agencies, including the government, are still writing cheques to that company, day in, day out. If the government refused to accept or write cheques, the whole payments system could be tranformed overnight."

However, O'Toole believes that although companies are "quick to point the finger" when it comes to the administrative burden, there is a lot they could be doing to solve the problem for themselves.

"I think companies, like our wider society, have to make sure that they reduce the administrative burden to the greatest extent possible. We are quick to point the finger when it comes to this, blaming excessive regulation for example. While this is clearly a problem, I think that individual firms could be doing a lot more in harnessing technology better, and removing the large volumes of paper that seem to beset the modern office. This is true of our payments system, but goes onto many other areas of business."

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