Reliance on cheques and cash costs the Irish economy €1.6bn a year, writes Carissa Casey, Irish Independent, but while e-banking is becoming ever more popular, there's a risk that some people will be left behind

Since Olga Hick's local National Irish Bank branch closed in Skerries, Co Dublin, a few months ago, she has been unable to get a statement of her account balance.

She got rid of the wireless broadband service she was using to access the internet at home because of poor reception, so she can't avail of NIB's extensive e-banking service.

"I don't want to access my bank account at work," she says. "I just don't think it's very secure."

Nor has she signed up for telephone banking, again because of security concerns.

"It's very frustrating. As far as I know, the nearest (NIB) ATM is in Drogheda now," she says.

Olga is just 35 and could be assumed to be part of that generation that will adapt relatively easily to the so-called cashless, e-banking society of the future.

But like many others in her area, she claims the closure of the local branch has caused a great deal of confusion and frustration.

Unfortunately for Olga and those in a similar situation, electronic banking is the future, whether we like it or not.

By the end of this year, all of NIB's remaining 33 branches will be cash-free.

About a fifth are already cashless, offering only financial advice to customers, rather than what most of us would regard as traditional banking services.

There are good reasons for the change and it's not just the bank that is saving money.

Ireland is the second biggest user of cheques in the eurozone. It is a costly way of handling money, compared with electronic transfer.

According to NIB's chief economist Ronnie O'Toole, the issuing, processing and storage of cash and cheques costs the Irish economy €1.6bn a year.

The Government has started to make a range of payments -- farm supplements, State pensions and the like -- directly into bank or An Post accounts.

By the end of this year, the European Central Bank wants a single electronic-payments system across all member states and that will include the eventual phasing out of cheque payments.

For an increasing number of people, this isn't a problem since internet banking is so convenient.

In 2009, the number of e-banking customers in Ireland rose to 2.6 million, a 16.6pc increase on the previous year, according to the latest figures from the Irish Banking Federation and the Irish Payment Services Organisation.

These customers are using the service more frequently than ever before.

They accessed their accounts 136.1 million times, 17.2pc more than in 2008 and made 3.4 million payments, 12.7pc more than the previous year.

But not everyone is online. Among the over-65s, just 25pc have computer skills.

"It's a huge issue," says Age Action's Eamon Timmins.

"On the one hand, e-banking is fantastic for people with mobility issues who can't get out of the house.

"But if they don't know how to use a computer, then it's a big barrier.

"And it's not just being able to access online accounts, it's also about getting financial information and education because so much of that is on the internet now."

Sadly, funding for an IT training programme for elderly people is coming to an end this year, despite the fact that there is a waiting list of some 1,000 eager to learn about computers.

"I really think it's in the banks' interests to contribute to training in this area. Elderly people are an important market for them," says Mr Timmins.

"We don't just teach them computer skills, we also give them important security information, such as not responding to emails asking for personal details."

Security is a key issue for all of us in the world of e-banking.

Customers are more vulnerable in many ways than a cashless bank and will need to be protected.

In 2006, Bank of Ireland customers lost as much as €160,000 when they responded to a fake email and provided their account details to a false website.

The bank initially said it would not compensate those who were fooled but it later changed tack.

Fraudsters are likely to get more sophisticated in future.

Then there are the hidden costs. In 2007, Visa Europe claimed that by 2012 we would all be making small payments via smart cards.

Those still using cash might be penalised with higher charges to cover the processing costs, it claimed.

But almost immediately, a group of British retailers pointed to the high cost of processing credit card payments.

"A lot of retailers pass on the merchant processing charge for credit card payments to consumers," said Dermott Jewell of the Consumer Association.

"And for a lot of purchases, the ability to pay cash gives consumers negotiating power, particularly these days."

He also points out that some companies charge customers who refuse to sign up for a direct debit more than those who do.

"I'm fine if a company wants to provide an incentive for direct debits -- but it's not on to penalise those who don't want to sign up for one."

The biggest irony, perhaps, is that in the midst of the current economic downturn most businesses are starving for lack of cash. Most prefer to be paid in hard cash these days.

The great cashless society might look good on a computer screen, but it could be some way off yet.