UK could scrap 1p and 2p coins

UK could scrap 1p and 2p coins

With Brits increasingly turning to electronic payments, the UK government has raised the possibility of ditching 1p and 2p coins and even £50 notes.

While stressing that there are no immediate plans to scrap any denominations, the Treasury is calling for feedback on the issue as part of an investigation of cash and digital payments, outlined during the Spring Statement.

Cash has fallen from being 62% of all payments by volume in 2006, to 40% in 2016, and is predicted to fall to 21% by 2026.

However, with research suggesting that there are 2.7 million people across the UK who are entirely reliant on cash, the government is keen to stress that it will support the payment method through ATM access.

Nevertheless, with six in 10 1p and 2p coins used just once before making their way into a saving jar or simply thrown in the bin, the government wants feedback on whether Brits would want to follow the likes of Australia, Canada and Sweden in getting rid of the lowest denominations.

At the other end of the spectrum, the Treasury is also pondering the future of the £50 note, which is rarely used for purchases and has been linked with money laundering and tax evasion.

"From an economic perspective, having large numbers of denominations that are not in demand, saved by the public, or in long-term storage at cash processors rather than used in circulation does not contribute to an efficient or cost effective cash cycle," says the consultation document.

Elsewhere, the paper talks up government's support of digital payments, citing the creation of the Payment Systems Regulator, PSD2 and the Open Banking initiative, and the Bank of England's upcoming revamp of the RTGS system.

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Comments: (1)

A Finextra member
A Finextra member 15 March, 2018, 03:57Be the first to give this comment the thumbs up 0 likes

Finally. The Revolution.