Coin Use Declines in Great Britain|
July 30, 2013
Last month’s “Around the World” column was dominated by news stories regarding if the use of coinage in commerce is becoming passé.
To summarize, Canada, Ireland, New Zealand, South Africa and others are either experiencing a decline in the use of coins and bank notes in monetary transactions, or are looking at alternatives to using these currency vehicles versus potential substitutes. As hard as it may be to imagine, in Ghana pickpockets actually had the audacity to recently protest their being deprived of their livelihood by substitutes for cash in the pockets of their potential victims.
Are coins and bank notes becoming ‘so 20th century?’ Is the digital world about to take over, with physical cash going the way of the dodo bird?
Now Great Britain is the nation that is beginning to ask itself this same question. According to a recently released survey conducted by the British Retail Consortium, British consumers are using 10 percent less cash when shopping than they did only one year earlier.
According to the survey, although 54 percent of all transactions were made using cash during 2012, coins and bank notes represented just £29 of every £100 spent. One year earlier coins and bank notes represented £32 of every £100 spent, a decline of about $5 U.S. in only one year. This is a decline of 10 percent. One year earlier 61 percent of all transactions were made in cash.
The BRC has been conducting this survey for the past 13 years. It is the first time such declines have been indicated. According to the survey, the average individual cash transaction value declined from £10.45 in 2011 to £9.78 in 2012.
The British newspaper The Daily Mail was quick to dramatize the findings in its May 30 issue, where it reads: “The revelation has prompted experts to suggest ‘money is about to change forever’—and brings closer the concept of a future without notes or coins, where shoppers pay for everything with plastic.”
BRC Director General Helen Dickenson was less dramatic. Dickenson said, “New ways to pay and new ways to shop are shaping the retail landscape like never before. Changing customer preferences are driving the increase in debit card use—they’re helping people to manage their money better and are a natural fit for online shopping and self service checkouts.”
In other words, the mode of people’s shopping habits are also changing. Could it be that the more people make purchases online the more it will skew the statistics regarding over the counter cash and non-cash transactions?
KPMG spokesman Mark Hale recently told City AM, “It is no longer a sweeping statement to suggest that money is about to change forever. It might not be tomorrow, but the direction is set.”
Of what direction is Hale speaking? According to Dickinson, “Cash is still the most popular way to pay. But our survey shows how rapidly alternative and emerging methods are gaining ground, with growth more than doubling on the previous year, albeit from a low base.”
Dickenson continued, “These methods will be the ‘ones to watch’ in the future, and retailers are investing heavily to make sure their customers have choice and convenience in ways to pay, whether in-store, at home, or on the move.”
The BRC survey indicated transactions using credit and charge cards declined by 3 percent during 2012, however transactions using debit cards increased by the same percentage. Considering that British retailers are charged 38 pence per transaction by banks for accepting a credit or charge card versus 1.5 pence for accepting “tap and go” contactless card payments, PayPal payments, and mobile phone transactions, merchants are encouraging this trend. PayPal, as an example, now represents 5 percent of all transactions.
The trend in the use of cash in Great Britain will need to be tracked for several more years before it can be determined if a pattern is emerging. As European Central Bank ECB Executive Board member Benoît Cœuré said at a May 2 conference in Vienna, “While there can be no objections to a society with less cash, a cashless society is not possible in the foreseeable future.”
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