Page last updated at 12:29 GMT, Friday, 13 February 2009

Who wins if the coin spins away?

1 coin
Different methods of payment cost different amounts to process

On the flip of a coin, there is always a winner and always a loser. As coins become used less frequently in the UK, so some will benefit and some will miss out.

By 2015, it is predicted that notes and coins will be used less often than other forms of payment, such as plastic cards or mobile transfers.

This could make life easier for some consumers and be more efficient for some businesses, but others will be counting their losses.

So who will welcome the move towards a cashless society, and who might fear it?


A cashless society would be a key battleground for banks and financial institutions.

Donations to charities are noted in an annual report

They would be fighting hard for their debit/credit card to be at the front of any consumer's wallet.

The more frequently it is used, the better for the bank - especially if it creates more brand loyalty for their financial services.

Such exclusive access to customers becomes even more distinct if the chip in a plastic card is embedded into a mobile phone or watch.

In this scenario, all the consumer's transactions - either debit or credit - are made using one bank's services which would aid its market share.

Peter Hahn, an expert in corporate finance and banking issues at Cass Business School at City University in London, says that the processing costs of cash are high for banks.

We would not want to discourage giving in the form of cash donations
Karl Wilding, National Council for Voluntary Organisations

But, despite these arguments, he believes that cash will not disappear.

Another potential winner, perhaps surprisingly given the image of the collection tin, could the charitable sector which is encouraging non-cash donations.

Charities and voluntary organisations prefer regular donations through standing orders or direct debits because it gives them certainty with their finances. These standing orders come in every month, whereas cash donations tend to be more spontaneous.

"We would not want to discourage giving in the form of cash donations as the two forms of giving are not mutually exclusive," says Karl Wilding, head of research at the National Council for Voluntary Organisations.

Its figures back up this view. Charitable giving by card and cheque, used by 15% of donors, accounted for 29% of the total amount given in 2007/8. Cash is the most popular donation method, but only accounts for 13% of the total amount.

Card and direct debit giving is rising, but cash giving is falling.


Those without access to a bank account are clearly the biggest losers in a move towards a cashless society.

There are many reasons for this kind of financial exclusion - often based around a lack of sufficient identification to open an account.

One example of a man in his 40s is cited by Toynbee Hall - a social support group in East London which helps the financially excluded.

The man needed to open a bank account to get paid his wages from his job as a cleaner.

Some of his ID documents had been stolen in a robbery and the bank was not willing to open an account for him without sufficient identification.

With the support of Toynbee Hall, he was able to open an account with a credit union.

Fruit and veg stall
Market traders generally operate as cash-only businesses

Other reasons for financial exclusion include women who have fled abusive relationships and only have a post office number address, those who simply do not trust banks, and those who prefer the "jam jar" method of managing their money.

New migrants also struggle to open accounts at times, so none of these people would be given cards to use contactless technology.

Some small businesses also operate on a cash-only basis. Most notably market traders are unlikely to take cards.

They might have to spend money on a card terminal, which can be bought for a few hundred pounds, or rented for a monthly charge of about 20.

The elderly can be less responsive to changing technology, and charities are keen for alternative ways of paying to be fully explained to older people.

David Sinclair, of Help the Aged, is particularly concerned about the viability of payments made with a mobile phone.

"Mobile usage declines with age, and older people are less likely to use other functions than the phone," he says.

Practical issues include the fact that buttons are too close together for some older people, he adds.

"This could lead to the embarrassing situation when they are sending 1,000, rather than 100," he says.

About 750,000 people in the UK also struggle to remember Pin numbers, or have trouble entering it in the correct order.

Swipe-and-go cards could prove to be helpful to these people.

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