Home Knowledge COVID-19 – Accelerating the Trend Towards a Cashless Society?

COVID-19 - Accelerating the Trend Towards a Cashless Society?


Coronavirus has plunged the world into uncertainty, as countries around the globe race to put together economic packages to stop their economies from crumbling. The World Trade Organisation’s chief said that projections show that the economic downturn could be worse than the 2008 recession.

However, the world of banking and payments has changed dramatically since the 2008 recession. Fintechs, such as electronic money institutions and payment institutions, offering innovative payment services and solutions, have revolutionised the banking and payments landscape and, unlike in 2008, fintech is now a fully-fledged industry of its own. With that, we briefly consider a number of trends emerging from the COVID-19 crisis which will change the banking and payments landscape as we know it.

The end of cash?

The sharp reduction in the use of cash has been accelerated by COVID-19. Prior to the crisis, digital payments were already on the rise as the use of cash rapidly declined. This has led central banks around the world to consider issuing their own electronic currencies. Last month, the Swedish Riksbank (Central Bank) announced the launch of a yearlong pilot project of its proposed e-krona and it is not just the Swedes who have their eye on this. While there have been no express plans by The Central Bank of Ireland, earlier this year the president of the European Central Bank, Christine Lagarde, said innovation in the area of payments warranted the bank’s active involvement in the development of a central bank digital currency. In the US, in an earlier draft of the recently enacted Coronavirus Aid, Relief, and Economic Security Act, it considered a digital dollar as a means of getting money to individuals and small businesses faster to solve the cash-flow crisis.

How is Ireland positioning itself as European FinTech hub in this new payments landscape?

With restrictions on traditional branch banking, consumers desire for digital banking has increased, forcing many traditional financial institutions to fast-track digital innovation efforts. The surge in demand has led to an increase in applications to the Central Bank of Ireland for authorisation as electronic money institutions (or e-money institutions) and payment institutions.

A further factor contributing to the surge of applications to the Central Bank of Ireland for authorisation as an electronic money institution or payment institution is Brexit. Ireland’s strong technology and financial services sectors, coupled with its business-friendly environment, low corporate tax rate, flexible labour laws and common law legal system, makes Ireland an attractive choice for UK-based electronic money institutions and payment institutions seeking an alternative EU base post-Brexit. William Fry has assisted 25% of electronic money institutions currently authorised in Ireland to successfully navigate the authorisation process with the Central Bank of Ireland. Having established ourselves as the market leader in electronic money and payment institution authorisations, we are currently acting for a second wave of applicants who are seeking to become authorised before the end of the year. As a result of the recent rise in the demand for digital payment solutions, we expect the upsurge in applicants seeking to become authorised electronic money institutions and payment institutions to continue.

Some key regulations to note

  • European Communities (Electronic Money) Regulations 2011 (as amended) (EMR): an electronic money institution is an undertaking authorised to issue e-money in accordance with EMR. The Central Bank of Ireland is responsible for the authorisation, prudential regulation and supervision of electronic money institutions in Ireland.
  • Payment Services Directive (EU 2015/2366) (PSD2): this directive aims to make online payments more secure for both EU customers and businesses. It does so by introducing strict security requirements for electronic payments and the protection of consumers’ financial data, guaranteeing safe authentication and reducing the risk of fraud.


Increasingly we are seeing banks and FinTechs working together to exploit opportunities for collaboration rather than seeing each other as competitors. Electronic money institutions and payment institutions are grappling with similar challenges to banks such as cybercrime, fraud, privacy, consumer protection and personal data protection. William Fry has also been busy acting for acquirers and targets in FinTech M&A deals with certain banks acquiring a FinTech which can best fill a gap in the bank’s existing offering to customers.

For more information, please contact Shane Kelleher or your usual William Fry contact.

Our partners, associates and our support teams are available as usual to support your business.

Contributed by Roisin McCaughey & David O’Shea