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Reports of the death of notes and coins have been greatly exaggerated – and thank goodness, says Jim Griffin
We're often led to believe that cash is close to extinction. But reports today suggest notes and coins are still our preferred method of payment on the high street. According to the British Retail Consortium (BRC), around 56% of all transactions were paid for using cash last year. And it is easy to see why.
I'm an avowed user of notes and coins over card payments – I once spent a week living without cash, making only plastic payments. I found it restrictive and, on reflection, expensive. It was difficult to keep track of everything I bought – cards make you feel less like you are actually spending money – which I think accounts for the enduring popularity of cash, especially in the current economic climate.
People are reining in their spending, which means they need to know exactly where their money is going. Cash is the best way to do this – you withdraw it and spend it, handing over notes for each transaction; card payments somehow take this intimacy away and you can lose track of your spending as your wallet succumbs to a stash of receipts.
But this doesn't stop the banks trying to foist cash-free payment methods on to us – the Barclaycard/Oyster tie-up being a prime example. They market it as convenient for the consumer – your travelcard and credit card with "contactless payment" feature for purchases under £10, all on one device. It sounds great, but it distances your spending and gives instant access to your credit card account without the need to type in a Pin. In short it opens up a world of spending on credit.
These methods also cost retailers more to process – transactions paid for in cash cost an average of 2p each to process compared with 8p for a debit card payment and 35p for a credit card one, according to the BRC. And the charges for these transactions go where? To the banks. The same banks trying to repair their severely reduced books. No wonder they are so keen to get us to embrace electronic payment methods.
But it will take a lot to persuade me that cash is no longer king. What about you? Do you struggle to budget when using debit and credit card payments, or have you been persuaded that plastic is the future and coins and notes should be phased out?
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