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Payment Methods: Online vs. Offline - Ireland - July 2016

“Compared to less than a decade ago when cash was the preferred method of payment among Irish consumers, the Irish payments industry has changed dramatically. Non-cash methods of payment have become increasingly popular - most notably debit cards, which have now far surpassed credit cards as consumers' favourite form of plastic payment card. While cheques are not nearly as significant as they once were, they remain an important (albeit niche) method of payment".
– Brian O’Connor, Senior Consumer Analyst

This report discusses the following key topics:

  • Need to provide consumers with alternative budgeting tools
  • Evolution rather than revolution best suits the payment industry
  • Security remains a fundamental issue for consumers

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Table of contents

  1. Overview

    • What you need to know
      • Issues covered in this report
      • Executive Summary

          • Current state of the payments sector
            • Decline of cash as most popular payment method
              • Cheques no longer as important as they once were – but still have a role
                • Debit cards the number one form of plastic payment option
                  • Debit cards forecast to be most common payment method by 2021 in UK (including NI)
                    • Market factors
                      • Online access at all-time high among Irish consumers
                        • Social network-use now a mainstream activity among Irish consumers
                          • Smartphone ownership nearing 90% among Irish consumers
                            • Key players and innovations
                              • The consumer
                                • Cash remains Irish consumers' preferred payment method
                                  • Figure 1: Types of payment methods used by consumers (offline and online) in the last month, NI and RoI, April 2016
                                • Expectation of cashless society – but cash-attachment remains strong
                                  • Figure 2: Attitudes towards cash and cheques, NI and RoI, April 2016
                                • Around four in 10 making more use of contactless payments
                                  • Figure 3: Agreement with statements relating to contactless payments, NI and RoI, April 2016
                                • Consumers want protection, and are willing to play their part
                                  • Figure 4: Attitudes towards selected statements relating to security, NI and RoI, April 2016
                                • Consumers uncertain about advanced payments-related technology
                                  • Figure 5: Agreement with statements relating to new payment-related technology, NI and RoI, April 2016
                                • What it means
                                • Issues and Insights

                                  • Need to provide consumers with alternative budgeting tools
                                    • The facts
                                      • The implications
                                        • Evolution rather than revolution best suits the payment industry
                                          • The facts
                                            • The implications
                                              • Security remains a fundamental issue for consumers
                                                • The facts
                                                  • The implications
                                                  • The Market – What You Need to Know

                                                    • Online access at all-time high among Irish consumers
                                                      • Social network shows potential for payment platforms
                                                        • Smartphone ownership nearing 90% among Irish consumers
                                                        • Current State of the Payments Sector

                                                            • Dependence on cash slowly declining in NI and RoI
                                                              • Figure 6: ATM cash withdrawals, by volume (millions) and value (€ billion), RoI, 2005-14
                                                              • Figure 7: Number of cash withdrawals from ATMs, millions, UK (including NI), 2001-14
                                                            • The era of cheques is not coming to the end just yet
                                                              • Figure 8: Volume (millions) and value (€ billions) of cheques processed, RoI, 2005-14
                                                              • Figure 9: Volume (millions) and value (£ billions) of cheques processed, UK (including NI), 2013-16*
                                                            • Debit cards now established as dominant plastic payment option
                                                              • Figure 10: Volume of card payments, debit and credit, millions, RoI, 2005-14
                                                              • Figure 11: Value of card payments, debit and credit, € billions, RoI, 2005-14
                                                              • Figure 12: Volume of card purchases, debit and credit, millions, UK (including NI), 2009-15
                                                              • Figure 13: Value of card purchases, debit and credit, £ billions, UK (including NI), 2009-15
                                                            • Popularity of contactless payments adding to debit cards' dominance in UK (including NI)
                                                              • Debit cards on course to be most common payment method by 2021
                                                                • Figure 14: Average monthly payments by UK (including NI) consumers, actual and forecast, 2015 and 2025
                                                            • Market Drivers

                                                              • More Irish consumers are online than ever before
                                                                • Figure 15: Internet take-up, NI, 2010-15
                                                                • Figure 16: Households with internet access, RoI, 2009-15
                                                              • Vast majority have fixed or mobile broadband
                                                                • Figure 17: Households with internet access classified by type of internet access, RoI, 2015
                                                              • Majority of consumers using social networks on regular basis
                                                                • Figure 18: Social networks that consumers log on to regularly (ie log on to at least once per week), NI and RoI, April 2016
                                                              • Around half of all consumers using at least one messaging app
                                                                • Figure 19: Messenger apps that consumers log on to regularly (ie log on to at least once per week), NI and RoI, April 2016
                                                              • Almost nine in 10 Irish consumers now own smartphones
                                                                • Figure 20: Ownership of or access to mobile technology devices, May 2015-April 2016
                                                              • Cheques' days may not be numbered after all
                                                              • Competitive Strategies and Innovations – What You Need to Know

                                                                • PayPal launches PayPal Credit
                                                                  • Apple Pay expands into e-commerce
                                                                    • Google launches Android Pay
                                                                      • Visa explores biometrics to enhance security of online payments
                                                                        • Barclays expands bPay range with bPay Loop
                                                                          • ABN AMRO and Tikki enable payments using Whatsapp
                                                                          • Who’s Innovating?

                                                                            • Morpho teams up with Visa to develop biometric authentication
                                                                              • Barclays expands its contactless wearables range
                                                                                • ABN AMRO enables payments via Whatsapp
                                                                                • Competitive Strategies

                                                                                    • PayPal
                                                                                      • Key facts
                                                                                        • Competitive strategy
                                                                                          • Apple Pay
                                                                                            • Key facts
                                                                                              • Competitive strategy
                                                                                                • Android Pay
                                                                                                  • Key facts
                                                                                                    • Competitive strategy
                                                                                                      • Bitcoin
                                                                                                        • Key facts
                                                                                                          • Competitive strategy
                                                                                                          • The Consumer – What You Need to Know

                                                                                                            • Cash remains Irish consumers' preferred payment method
                                                                                                              • Debit cards a close second in terms of preferred method
                                                                                                                • Credit card usage significantly behind debit card usage
                                                                                                                  • Consumers not ready to jettison cheques just yet
                                                                                                                    • Direct debits, standing orders and transfers all established methods
                                                                                                                      • PayPal dominating alternative payment methods
                                                                                                                        • Expectation of cashless society – but cash-attachment remains strong
                                                                                                                          • Around four in 10 making more use of contactless payments
                                                                                                                            • Consumers want protection, and are willing to play part
                                                                                                                              • Consumers uncertain about advanced payments-related technology
                                                                                                                              • The Consumer – Types of Payment Methods Used

                                                                                                                                  • Cash is still king when it comes to preferred methods of payment
                                                                                                                                    • Figure 21: Types of payment methods used by consumers (offline and online) in the last month, NI and RoI, April 2016
                                                                                                                                  • Cash the most 'democratic' of payment methods – used by all consumers
                                                                                                                                    • Figure 22: Consumers who have used cash as a payment method in the last month, by gender, age, and social class, NI and RoI, April 2016
                                                                                                                                  • Debit cards a close second in terms of preferred method
                                                                                                                                    • Figure 23: Consumers who have used debit cards (chip & PIN, online and contactless) as a payment method in the last month, NI and RoI, April 2016
                                                                                                                                  • Chip & PIN debit card use common across all demographics
                                                                                                                                    • Figure 24: Consumers who have used a debit card (chip & PIN) as a payment method in the last month, by gender and age, NI and RoI, April 2016
                                                                                                                                  • Use of debit cards online peaks among younger consumers
                                                                                                                                    • Figure 25: Consumers who have used a debit card (online) as a payment method in the last month, by gender, age, and social class, NI and RoI, April 2016
                                                                                                                                  • ABC1s most inclined to use contactless debit cards
                                                                                                                                    • Figure 26: Consumers who have used a contactless debit card as a payment method in the last month, by gender, age, and social class, NI and RoI, April 2016
                                                                                                                                  • Credit cards around half as popular as debit cards
                                                                                                                                    • Figure 27: Consumers who have used credit cards (chip & PIN, online and contactless) as a payment method in the last month, NI and RoI, April 2016
                                                                                                                                  • Credit cards usage highest when consumers transacting online
                                                                                                                                    • Figure 28: Consumers who have used a credit card (online) as a payment method in the last month, by gender, age, and social class, NI and RoI, April 2016
                                                                                                                                  • Older consumers and ABC1s most likely to use pay with credit cards via chip & PIN
                                                                                                                                    • Figure 29: Consumers who have used a credit card (chip & PIN) as a payment method in the last month, by gender, age, and social class, NI and RoI, April 2016
                                                                                                                                  • Cheque usage weighted towards older consumers and ABC1s
                                                                                                                                    • Figure 30: Consumers who have used cheques as a payment method in the last month, by gender, age and social class, NI and RoI, April 2016
                                                                                                                                  • Direct debits, standing orders and transfers the modern cheques
                                                                                                                                      • Figure 31: Consumers who have used direct debits/standing orders as a payment method in the last month, by gender and age, NI and RoI, April 2016
                                                                                                                                      • Figure 32: Consumers who have used a bank transfer as a payment method in the last month, by age and social class, NI and RoI, April 2016
                                                                                                                                    • PayPal the clear leader among alternative payment methods
                                                                                                                                      • Figure 33: Consumers who have used PayPal, Android payment app, Apple Pay and Bitcoin as a payment method in the last month, NI and RoI, April 2016
                                                                                                                                    • PayPal usage reasonably high among all consumers
                                                                                                                                      • Figure 34: Consumers who have used PayPal as a payment method in the last month, by age and social class, NI and RoI, April 2016
                                                                                                                                  • The Consumer – Attitudes towards Cash and Cheques

                                                                                                                                      • Most believe cash and cheques are on the way out
                                                                                                                                        • Figure 35: Attitudes towards cash and cheques, NI and RoI, April 2016
                                                                                                                                      • Broad agreement that usefulness of cheques is waning
                                                                                                                                        • Figure 36: Agreement with statement, 'I think cheques are becoming obsolete', by gender, age and social class, NI and RoI, April 2016
                                                                                                                                      • Older consumers more resistant to idea of a cashless society
                                                                                                                                        • Figure 37: Disagreement with statement, ‘I feel a 'cashless society' is inevitable in the future’, by gender and age, NI and RoI, April 2016
                                                                                                                                      • ABC1s more inclined than C2DEFs to agree that cashless society is imminent
                                                                                                                                        • Around half recognise value of cash for budgeting purposes
                                                                                                                                          • Figure 38: Agreement with statement, ‘Using cash is the easiest way to keep track of spending’, by gender and age, NI and RoI, April 2016
                                                                                                                                        • Half agree, one in five disagree that cash is a more secure method of paying
                                                                                                                                          • Figure 39: Agreement with statement, ‘Cash is a more secure method of payment’, by gender, age and social class, NI and RoI, April 2016
                                                                                                                                        • Preference for cashless methods highest among younger consumers
                                                                                                                                          • Figure 40: Agreement with statement, ‘I prefer to use cashless payment methods when possible (eg contactless card)’, by age and social class, NI and RoI, April 2016
                                                                                                                                      • The Consumer – Attitudes towards Contactless Technology

                                                                                                                                          • Around four in 10 consumers using contactless more than they did last year
                                                                                                                                            • Figure 41: Agreement with statements relating to contactless payments, NI and RoI, April 2016
                                                                                                                                          • Growth in contactless use coming from ABC1s and 25-34s
                                                                                                                                            • Figure 42: Agreement with statement, ‘I am using contactless payments more compared to 12 months ago’, by gender, social class and age, NI and RoI, April 2016
                                                                                                                                          • Handing control to consumers would appeal to around 40%
                                                                                                                                            • Figure 43: Agreement with statement, ‘I would like to be able to set daily limits on how much I can spend with contactless payments (eg £100/€100 limit per day)’, by gender, social class and age. NI and RoI, April 2016
                                                                                                                                        • The Consumer – Attitudes towards Security

                                                                                                                                            • Majority of consumers want and value consumer protection
                                                                                                                                              • Figure 44: Attitudes towards selected statements relating to security, NI and RoI, April 2016
                                                                                                                                            • Demand for protection broadly consistent across all ages
                                                                                                                                              • Figure 45: Agreement with statement, ‘I am less likely to use a payment method that doesn't have some type of consumer guarantee or protection’, by gender and age, NI and RoI, April 2016
                                                                                                                                            • Six in 10 believe biometric measures would improve online security
                                                                                                                                                • Figure 46: Agreement with the statement, 'I think that biometric measures (eg fingerprints, iris scan) would help to improve online payment security', NI and RoI, April 2016
                                                                                                                                            • The Consumer – Attitudes towards New Technology

                                                                                                                                                • Consumer dubiousness when it comes to payments and social media
                                                                                                                                                  • Figure 47: Agreement with statements relating to new payment-related technology, NI and RoI, April 2016
                                                                                                                                                • Tech-savvy consumers open to alternative means of verifying identity
                                                                                                                                                  • Figure 48: Agreement with statement, ‘I would be interested in alternative means of verifying my identity when buying stuff online (eg taking a selfie instead of a password)’, by daily internet usage and devices in household, NI and RoI, April 2016
                                                                                                                                                • Majority would be uncomfortable sending payments via social media
                                                                                                                                                    • Figure 49: Agreement with statement, ‘I would be comfortable using a social media or messaging app (such as Facebook Messenger or Whatsapp) to send payments to friends or family’, by daily internet usage, NI and RoI, April 2016
                                                                                                                                                • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                  • Data sources
                                                                                                                                                    • Abbreviations
                                                                                                                                                    • Appendix – The Consumer

                                                                                                                                                      • NI Toluna tables
                                                                                                                                                        • Figure 50: Types of payment methods used by consumers (offline and online) in the last month, by demographics, NI, April 2016
                                                                                                                                                        • Figure 51: Types of payment methods used by consumers (offline and online) in the last month, by demographics, NI, April 2016 (continued)
                                                                                                                                                        • Figure 52: Types of payment methods used by consumers (offline and online) in the last month, by demographics, NI, April 2016 (continued)
                                                                                                                                                        • Figure 53: Agreement with the statement ‘Using cash is the easiest way to keep track of spending’, by demographics, NI, April 2016
                                                                                                                                                        • Figure 54: Agreement with the statement ‘Cash is a more secure method of payment’, by demographics, NI, April 2016
                                                                                                                                                        • Figure 55: Agreement with the statement ‘I feel a 'cashless society' is inevitable in the future’, by demographics, NI, April 2016
                                                                                                                                                        • Figure 56: Agreement with the statement ‘I think low domination coins should be taken out of circulation (eg 5p)/5c)’, by demographics, NI, April 2016
                                                                                                                                                        • Figure 57: Agreement with the statement ‘I prefer to use cashless payment methods when possible (eg contactless card)’, by demographics, NI, April 2016
                                                                                                                                                        • Figure 58: Agreement with the statement ‘I think biometric measures (eg fingerprints/iris scan) would help to improve online payment security’, by demographics, NI, April 2016
                                                                                                                                                        • Figure 59: Agreement with the statement ‘I would be interested in alternative means of verifying my identity when buying stuff online (eg taking a selfie instead of a password)’, by demographics, NI, April 2016
                                                                                                                                                        • Figure 60: Agreement with the statement ‘I am using contactless payments more compared to 12 months ago’, by demographics, NI, April 2016
                                                                                                                                                        • Figure 61: Agreement with the statement ‘I am less likely to use a payment method that doesn’t have some type of consumer guarantee or protection’, by demographics, NI, April 2016
                                                                                                                                                        • Figure 62: Agreement with the statement ‘I would like to be able to set daily limit on how much I can spend with contactless payments (eg £100/ €100) limit per day)’, by demographics, NI, April 2016
                                                                                                                                                        • Figure 63: Agreement with the statement ‘I think cheques are becoming obsolete’, by demographics, NI, April 2016
                                                                                                                                                        • Figure 64: Agreement with the statement ‘I would be comfortable using a social media or messaging app (eg Facebook Messenger, Whatsapp) to send payments to friends and family’, by demographics, NI, April 2016
                                                                                                                                                      • RoI Toluna tables
                                                                                                                                                        • Figure 65: Types of payment methods used by consumers (offline and online) in the last month, by demographics, RoI, April 2016
                                                                                                                                                        • Figure 66: Types of payment methods used by consumers (offline and online) in the last month, by demographics, RoI, April 2016 (continued)
                                                                                                                                                        • Figure 67: Types of payment methods used by consumers (offline and online) in the last month, by demographics, RoI, April 2016 (continued)
                                                                                                                                                        • Figure 68: Agreement with the statement ‘Using cash is the easiest way to keep track of spending’, by demographics, RoI, April 2016
                                                                                                                                                        • Figure 69: Agreement with the statement ‘Cash is a more secure method of payment’, by demographics, RoI, April 2016
                                                                                                                                                        • Figure 70: Agreement with the statement ‘I feel a 'cashless society' is inevitable in the future’, by demographics, RoI, April 2016
                                                                                                                                                        • Figure 71: Agreement with the statement ‘I think low domination coins should be taken out of circulation (eg 5p/5c)’, by demographics, RoI, April 2016
                                                                                                                                                        • Figure 72: Agreement with the statement ‘I prefer to use cashless payment methods when possible (eg contactless card)’, by demographics, RoI, April 2016
                                                                                                                                                        • Figure 73: Agreement with the statement ‘I think biometric measures (eg fingerprints/iris scan) would help to improve online payment security’, by demographics, RoI, April 2016
                                                                                                                                                        • Figure 74: Agreement with the statement ‘I would be interested in alternative means of verifying my identity when buying stuff online (eg taking a selfie instead of a password)’, by demographics, RoI, April 2016
                                                                                                                                                        • Figure 75: Agreement with the statement ‘I am using contactless payments more compared to 12 months ago’, by demographics, RoI, April 2016
                                                                                                                                                        • Figure 76: Agreement with the statement ‘I am less likely to use a payment method that doesn’t have some type of consumer guarantee or protection’, by demographics, RoI, April 2016
                                                                                                                                                        • Figure 77: Agreement with the statement ‘I would like to be able to set daily limit on how much I can spend with contactless payments (eg £100/€100) limit per day)’, by demographics, RoI, April 2016
                                                                                                                                                        • Figure 78: Agreement with the statement ‘I think cheques are becoming obsolete’, by demographics, RoI, April 2016
                                                                                                                                                        • Figure 79: Agreement with the statement ‘I would be comfortable using a social media or messaging app (eg Facebook Messenger, Whatsapp) to send payments to friends and family’, by demographics, RoI, April 2016

                                                                                                                                                    Companies Covered

                                                                                                                                                    To learn more about the companies covered in this report please contact us.

                                                                                                                                                    Payment Methods: Online vs. Offline - Ireland - July 2016

                                                                                                                                                    £1,095.00 (Excl.Tax)