Page last updated at 23:37 GMT, Monday, 23 March 2009

Penniless and proud for one year

By Kevin Peachey
Personal finance reporter, BBC News

James Allan
James Allan said travel across the capital was the most difficult issue

Most twenty-somethings will complain that they have been seriously short of cash for the last year.

But it comes as some surprise when a 25-year-old says he decided not to bother with notes and coins at all.

James Allen, a website manager from London, emerged from a "drunken bet" with the ambition to avoid hard cash for a whole year - only using cards and internet transactions for his day-to-day business.

Now, 12 months on, he says that despite the odd awkward situation it has been an experience to savour and he plans to carry on.

Free and easy

James, who is unmarried and has no children, says that the task even allowed him to enjoy some of the less mainstream events of the UK capital.

There were times when I was frustrated and close to giving up, but now I do not see what I am missing
James Allan

"I discovered a lot about where I live," he says. "I had the mentality of having fun, but not having to pay for it."

Searching for free events led him to museums, lectures and open-air cinemas. But avoiding cash also meant that he once saw a 50 note lying on the pavement, but just had to walk by without touching it.

A year ago, James gave away the last of his coppers to embark on the challenge.

He admits that travelling around London was occasionally a struggle and he upset the occasional friend when he was unable to pay into a collection at a pub music gig.

Remembrance Day also required an online donation and an acceptance that, although he had supported the Royal British Legion's fund, he would not be able to wear the symbolic poppy.

He says that "British stubbornness" prevents more people from ditching notes and coins to use cards and online transfers instead.

Since he started, a credit card company has seized on the opportunity to promote their product by using him in some of their marketing.

But he says that card use is becoming more frequent among consumers.

"It has got a lot easier. Many more places now take cards compared with a year ago," he says.

"There were times when I was frustrated and close to giving up, but now I do not see what I am missing."

Cashless society?

His story reflects a growing reliance on plastic instead of cash, according to some experts.

Credit cards
Total spending on debit and credit cards rose in 2008, the figures show

By 2015, the number of payments made by cash in the UK will be overtaken for the first time by other ways of paying, according to payments association Apacs.

The group recently reported that debit card spending rose 9% to 245bn in 2008 from 224bn the previous year.

New technology, being expanded in the UK at present, allows a card to be pressed close to a sensor in a shop for small purchases.

But the British Retail Consortium (BRC) is turning to the words of Mark Twain to suggest that rumours of the death of cash have been greatly exaggerated.

A poll of 16,000 shops found that cash was still the most popular way of spending, especially during a recession when householders found using notes and coins the easiest way to budget.

Cash was used for 56% of all transactions in 2008, down from 60% the previous year, the BRC's annual cost of collection survey revealed on Monday.

In 2008, 33% of spending in retail outlets was with cash, down from the 34% in 2007.

Way to pay

The BRC is unhappy about the cost differential for retailers dependent on the way their customers pay.

An average cash transaction costs retailers 2p, and a debit card payment costs 8p, but they are charged 35p when a customer uses a credit card, the BRC says.

"Banks are pushing new cards and payment technologies hard. Not surprising when they stand to make so much more in charges," says BRC director general Stephen Robertson.

"Despite the recession, they are looking to maximise their profits and protect their own interests at the expense of customers who ultimately meet these costs."

The banking industry has consistently challenged the BRC's position, claiming that the move towards cards and internet banking has been consumer-led.

It stresses that cash will remain for some time to come.

James Allen - although he is still not using notes and coins - agrees that the days of notes and coins are not spent yet.

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