That’s one for me, nineteen for you

[Dave Birch] Forum friend Ed Conway over at Sky has been blogging about the steady rise in cash “in circulation” in the UK. As the figures from the Bank of England clearly show, the amount of cash in the economy has been rising throughout the last decade and, it seems to me, is losing its correlation with the use of cash as a means of exchange to support commerce. As the use of cash in retail POS transactions has fallen, M0 has not.

The amount of notes and coins in Britain is now 4.12% of GDP – £63.4bn in cash terms. That’s up quite sharply from the levels of around 3% it was sitting at throughout the 90s and for most of the 2000s. Though as you can see from the graph, it’s down considerably since the 60s and 70s – largely as a result of credit and debit cards and electronic transfers.

[From Cash is Back – The Real Economy]

This theme is being explored further over at Ron Shevlin’s excellent “Snarketing 2.0” blog, where he has written about the same dynamic in the US. I got involved in the subsequent discussion there about cashlessness. I was reiterating my usual point, that cash supports crime more effectively than it supports commerce, and I noticed this in a comment on the thread.

When I moved from a state without an income tax (Texas) to one that did (New York), and bought a house, I quickly became aware of the number of otherwise reputable contractors who offered substantial discounts for cash payments.

[From The Less-Cash Society | Snarketing 2.0]

Indeed. Their preference for cash is nothing to do with its cost or its efficiency or its effectiveness but only because of the one very specific property of anonymity. The idea that people use cash because it is “better” than other payment mechanisms is laughable. This is a comment by a US supermarket manager and is a frank reflection on the high cost of cash.

It is surprising to me the number of people who still only deal in cash. We offer a payroll check cashing to our customers. They pay a $1.00 fee for us to cash it for them (btw far cheaper than any bank would). They in turn buy money orders to pay any bills that have to be mailed(another $1.00 charge to them for each mo)… These people are leaving the store with some times over $1000.00 in cash on them. It amazes me. Who are they hiding from?

[From Adventures in cash…less?]

I would have thought the answer was obvious: the taxman, baby, it’s the t–a-x-m-a-a-a-a-a-n. The use of cash to avoid tax is one of the most serious charges against it and in the current economic climate, it’s a damming one. Like many people, I feel very strongly that one of the reasons why my taxes are so high is because as great many people are not paying their share and probably one of the reasons why I should not be allowed to blog about anything at all in the week in which I submit my income tax self assessment form and wire a huge amount of money to the government.

A cashless economy would be an economy in which I pay less tax, so there is no better reason to urge it on with all my heart. Whether we should be aiming for cashlessness (utopian daydreaming unrelated to specific technologies or business drivers) or, as Ron says, less-cash (a more realistic but less attention-grabbing option), let’s get a move on. And while we’re at it, let’s work on the slogans. It’s clear from comments on this and other blogs that a great many people (in the USA, I mean) strongly object to being told that they can’t use cash. Fair enough. I don’t think we should ban it either. I just think we should be…

Celebrating Cash Independence

[From Celebrating Cash Independence with Sovereign-Santander | MasterCard Social Media Newsroom]

That’s a lovely phrase: “cash independence”. More positive than “cashless”. Let’s not take people’s cash away, let’s help them to become independent from it.

These are personal opinions and should not be misunderstood as representing the opinions of 
Consult Hyperion or any of its clients or suppliers