Copper coins and how we're going cashless
In the Spring Statement, the Chancellor announced a consultation on the future of copper coins and the £50 note (long associated with shady behaviour).
The Treasury noted that 8% of copper coins are thrown away, and six in ten are only ever used once. But the "penny-pinching" Chancellor was hit with an unexpected backlash.
Whilst the coins may be impractical, they carry emotional weight for many, harking back to bygone days of hoarded pocket money and weekend penny sweets.
Charities also complained that ad-hoc donations of unwanted change would fall. Downing Street has now backed away from the plan.
Yet cash in general is becoming decreasingly important. The volume of contactless payments increased by 20 times in the three years to June 2017, and nine in 10 transactions under £30 in fast food outlets, pubs and bars are made via contactless.
Other countries, including Canada, have abolished their one and two cent pieces. The Bank of England noted that 1p and 2p coins had the same processing and distribution costs as higher value coins, and actually cost more to circulate than the coins themselves are worth.
However, cash remains the cheapest form of payment for businesses - especially small- to process, especially after an EU rule was implemented in January banning additional charges for paying by debit or credit card.
Abolishing coppers also raises the possibility of a widespread rounding up of prices (think .99), which could cause an uptick in inflation.
For the 2.7 million people in the UK who are entirely reliant on cash, typically the oldest and poorest, the loss of coppers and any extensive price rises could hit hard.
And the Bank of England’s recent introduction of the more durable polymer banknotes represents both a large investment in, and vote of confidence for, the use of cash.
The long-term increase in debit and credit card transactions as well as cashless does appear to put a time limit on cash’s survival. Money transfer apps proliferate, so friends no longer withdraw cash to pay back small debts.
Amazon is even trialling a cashless supermarket without tills, where customers are tracked by cameras and "just walk out"; their Amazon account is immediately charged. Transactions which were previously usually paid in cash - taxis, underground tickets, takeaway food - are now frequently cashless.
Using Uber, Oyster cards, and Deliveroo... Cash won’t disappear for a long time yet, but its steady decline is likely to continue, whether or not copper coins survive.