"Why are we asking this now?
The Payments Council predicted yesterday that banknotes and coins
will be used for fewer than half of all transactions within five years. The Way We Pay 2010 report revealed that the use of cash has slumped in the past 10 years. Instead we're using plastic, with chip and pin and contactless cards set to dominate payments in the future.
According to the report, debit card usage has climb fourfold since 1999 – four times as fast as spending. Mike Bowman, head of policy and markets at the Payments Council, said: 'Although cash won't disappear in our lifetime, the continuing payments revolution will make it an ever smaller part of our spending.'
But everyone still uses cash don't they?
Only for small amounts, it seems. The Payments Council said that while 21 billion consumer payments were in cash last year, four-fifths of them were for amounts less than £10. Meanwhile for regular commitments, such as bills, cash has plummeted from 19 per cent of all payments in 1999, to just nine per cent last year. The number of people being paid in cash-in-hand has also shrunk, from one in eight in 1999 to just one in 20 in 2009. Even the tradition of waving a fiver or tenner in a boozer for service is disappearing as just 40 per cent of pub spending now involves cash, compared to 90 per cent a decade ago.
What about cheques?
They are set to disappear altogether. The Payments Council has suggested they be phased out by 2018. In evidence they point out that the use of the cheque book has been in steep decline since 1990 as people choose quicker payment methods. Last year, just 0.8 per cent of retail transactions were made with cheques. The Payment Council's 1999 prediction that just over one billion cheques would be used by individuals in 2009 proved to be almost twice as much as the actual number written, which was just 577 million.
The disappearance of the cheque is a contentious issue, particularly with older people. Michelle Mitchell, Age UK charity director, warned: 'The withdrawal of cheques would cause serious difficulties to some older people who don't feel comfortable with the chip and PIN system and don't like carrying around big amounts of cash,' she said. 'We urge the next Government to ensure the use of cheques is guaranteed until alternative payment methods are in place which older people feel comfortable with.'
However, pensions and benefit payments have already largely made the switch from cash. Ten years ago, 87 per cent of state benefits were paid in cash, whereas today 79 per cent of payments go directly into bank accounts" ...more
