Monday, 2 June 2014

To coin a phrase - consumers don't splash their cash but find plastic fantastic!

The range of customer choices on offer today when paying for goods and services is attributed to the reason why consumers are not using cash as much for their transactions. The British Retail Consortium (BRC) have released results of a survey which shows that cash use by customers has fallen by 14% in the last five years. Cash only accounted for just over half the transactions carried out last year (53%) with debit cards accounting for 32%. Contactless cards and different methods of payment such as self-service tills has widened the options available to us when paying for our items and services and even the smaller payments are now being paid using a debit card instead of cash.

Some customers moving back to a form of bartering for goods and services

Whilst reading the results today of this survey on consumer habits, another reason for the lack of cash payments also came to mind due to a conversation overhead in a small catering business this morning. The window cleaner was discussing the option of bartering his services for a coffee and sandwich so both café owner and he would not be subject to as he put it “paying the tax on each other’s service”. He went on to outline the work he did for two other businesses, namely a hairdresser and sports centre, where he cleaned the windows and they provided him with a haircut and access to their facilities. This form of bartering suited him down to the ground and the café owner was quite happy to come to an arrangement that benefited both of them.

Bartering has been around since man first started acquiring a type of prehistoric currency in the form of animal skins, weapons and the like. Money served to speed up this transaction process and whilst China was the first country that used recognisable coinage, the first coins to be minted were in Lydia or what is now, Western Turkey back in 600 BC. By the time Marco Polo travelled to China in 1200 AD they were using paper currency whilst European governments didn’t issue paper money until the time of the colonial governments in Northern America, and the rest, as they say, is history.
Banking charges cost both consumer and retailer but change is on the way

The BRC survey also picked up on the “unjustifiably” high costs that banks are levying for use of cards, with credit card payments increasing by 18% since 2009. On the other hand, debit cards cost around 9 pence to process against the 41 pence it costs to process a credit card. These “interchange fees” are there to enable consumers to pay safely and quickly for their goods and services according to the UK Cards Association who administer the card payments. However the European Commission are very near to approval of a plan to cap the cost that banks charge to retailers (this will not affect transactions within member states only cross-border purchases but every little bit helps).

If you have consciously reduced the amount of cash you spend and carry around with you then let us know the reason why – we’re listening!

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