[Dave Birch] I read in The Daily Telegraph the story of James Allan, 25, who has spent the last ten months living in Britain without cash. He’s been cards and cheques only since a drunken bet made in pub last December and has so far encountered on two really difficult problems: the one pound coin needed for a deposit on a supermarket trolley and a cash deposit that he needed to put down to rent a flat (he didn’t say why it had to be in cash). In the latter case, he called his Mum, and she took care of it for him. He says that he is likely to continue living without cash: “It is filthy and dirty and I have really gone off it”. His Mum’s comments on having to ferry a large amount of cash from Oxford to London because of her son’s pointless activities are not recorded.

It’s unlikely that retailers will adopt James’ approach to cash. Volume have actually gone up in the U.K., where cash has risen to 60% of all retail transactions (up from 54% last year), according a survey of half of all U.K. retail sales made by the retailers’ trade union, the British Retail Consortium (BRC).

British Retail Consortium Director General Stephen Robertson said: “Reports of the death of cash are premature. Cash is not only alive, it’s thriving. Hard up customers are increasingly reluctant to spend money they haven’t actually got in their hands. While total retail spending continues to grow, there is a widening gap between the amount spent in cash and the amount spent using cards, suggesting customers want to keep tight control of their finances.”

[From – British Retail Consortium – – News ]

The BRC claim that a cash transaction costs 2p to process but a debit card transaction costs them 8p and the average credit card transaction costs them 35p. Naturally, they want the cost of a debit card transaction reduced to the 2p. Fair enough, from their point of view. But we must remember that there is a difference between what a cash transaction costs the retailer and what it costs society as a whole. When I have to pay cash to buy a pack of gum and a newspaper because the retailer won’t accept a card payment for a £2 sale, it’s me that has to incur the cost of driving to an ATM and withdrawing cash. The transaction is cheaper for the retailer, but more expensive for me (and the bank).

As it happens, cash is falling out of favour with some types of retailers.

beginning Sept. 9, all Southwest Airlines aircraft will be equipped with handheld credit card devices that will enable Flight Attendants to take drink orders in a flash, and accept credit and debit cards for payment of cocktails, beer, wine, and Lo-Carb Monster energy drinks. The airline will no longer accept cash onboard.

[From Southwest Airlines Wants You to Keep Your Cash: Financial News – Yahoo! Finance]

I don’t think I’ll be buying any Lo-Card Monster energy drinks with cards, wampun, tobacco deposit certificates, stone discs or any other instrument that has served as an alternative to notes and coins as a circulating medium of exchange, but I will certainly look forward to enjoying the cash-free environment of Southwest Airlines in the future. You can see the logic of their action from a retailer’s perspective: If you reduce the volume of cash transactions at point of sale (POS) from the pre-plastic cards 100% to the current Western European average of 75%, that doesn’t save the retailer any money. The shop still needs tills and cash drawers, security guards and safes. They still need floats at the beginning of the day and cashing-up time at the end of the day. To make a significant saving, you need to get rid of the stuff completely.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]


  1. Hi David,
    One of Canada’s largest financial institutions (RBC) just launched (as a pilot) a mobile P2P solution that I have been playing around with. Because it’s SMS based, pretty much anyone (only in Canada currently) can use their phone to send money to someone else. This is a first for a Canadian bank and will hopefully start the move towards mobile payments and cash replacements. I would be interested to see what you thought about it: http://rbcmobex.com/

  2. This southwest airlines going cashless thing is ridiculous. They are flying on US soil and decline to accept US currency, that sounds illegal.

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