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An article relating to this blog post on Finextra:

Cash still king for customers

The British Retail Consortium (BRC) says customers still prefer to use cash when paying for purchases in stores despite moves by banks to boost revenues from fees through increased card spending.

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'Less Cash' not 'Cashless'

This story which deals with an interesting subject.  Who actually benefits from a shift away from the traditional use of cash?   Ultimately the economy of a country should benefit the use of more efficient, electronic payments rather than the slower and more costly forms of payment such as cash and cheques.  Whether this manifests itself as lower consumer prices, reduced bank charges or increased profits is a complex issue, which I do not propose to attempt to answer now, but it should contribute to the nation's overall competitiveness.

 A couple of points which (in my opinion) should also be considered in this debate:

1.  Retailers accept card payments by choice.  It's not compulsory.

2. It is over-simplistic to suggest that a £20 cash transaction cost a retailer less than 4 pence.  When all the other costs associated with cash, many fixed, are considered such as sorting, counting, balancing, reconciling, securing, fraud, transporting, lodging etc. along with bank charges, the cost is probably considerably higher.

3.  Without getting into the debate on the actual level of charges for card transactions, it has to be remembered that credit cards enable consumers to make immediate purchases that they might not otherwise be in a position to do so.  Using the BRC example, a retailer must make the business decision:  Make a £20 sale now (at the quoted transaction cost of 17 pence) or not make the sale at all? 

4.  If £32 of every £100 spent is cash, then more than two thirds of all spending is by other methods.  Given the rapid decline in the use of personal cheques, this would suggest that customers actually prefer cards.

5.  While it use may be declining, cash will not go away entirely.   Not all members of society have access to card products.  Others chose not to use cards.  Unless this changes, cash, the most successful payment product in history, is here for a while yet.


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