[PaulB]

Just a few random observations over the last few weeks....

I recently saw a comment on a company's website that last year 95% of their transactions were cashless and that they'd like to make that 100%.

It was in the news that the 1p & 2p coins may be withdrawn. It was stated that 60% of these coins were only used once (how do they know this?) and that the Royal Mint produces over 500 million of these coins per year.

However, "Downing Street" says that there are no plans to withdraw "copper" coins (so that's it.... they're going!)

I rarely use "card" contactless payments but often use Apple Pay. I've noticed that the value of transactions that I use Apple Pay for is dropping. A year ago, I'd almost invariably use cash if the transaction was less than £5. That value has dropped to £2-3 now. Some people accept a premium to do so. The other day at work, the person in the queue ahead of me at lunch chose to overpay to use contactless. The transaction was £4.50 but the shop's minimum card value was £5 so she paid £5! (Seeing that chilled me to my Yorkshire bones!)

What is the economics of this? The Treasury will need to produce fewer coins and notes. Businesses/banks won't need to move as much physical money around, but the number of electronic transactions has probably sky-rocketed (and is continuing to move skywards.)

Where does all of this use leave the consumer?

Just pondering (because I can't sleep!)

[Jim Jones]

The shop owner with the £5 minimum needs to review the contract, (but if they’re getting 50p or more extra from customers, why change?)

Prices that used to be £X.95 or £X. 99 can now be £X.999999, like petrol is per litre.

I find I’m using ATMs far less often than before, but spending more.

[rikur_]

Economics for whom.....?

For banks the move to contactless cards is a positive - cash and cashpoints are a net cost to banks (remember it costs them more than £10 to buy a £10 note) - plus the cost of the machine, filling it, etc. If you get your cash from someone else's machine, your bank is paying a transaction charge to them too. If you use contactless, the bank has no marginal cost, and another bit of the bank is probably receiving a small service charge. (There are actually some more complex businesss cases going on too for e.g. barclays who often provide the bank account, the card and the merchant services, so a lot of their transactions were 'wooden dollars' - but if you use your barclaycard via Apple Pay, then it's costing them money ....... probably why they've been experimenting with wristbands, key fobs, etc as an alternative to mobile phone payment)

For retailers - it depends on your sector. Other than the very smallest retailers, most are paying for cash handling - most will suffer an element of 'leakage' (i.e. hand in the till). Float usually also costs money to buy from the bank. The costs for taking contactless (and cards in general) are now far less than the old 1% + 20p that many people remember and it's likely that contactless will be comparable to cash.

In some markets there are other factors - e.g. vending machines, pay-and-display machines, train ticket vending machines - cash handling at these is a PITA. Moving parts in hostile environmental conditions, prone to vandalism, prone to theft, needs someone to go and collect the cash, etc .... In the short-term we might not be able to remove cash handling entirely, but at locations where I have multiple machines, they don't all need to accept cash.

For the consumer - there some people and some markets where believe it or not, many customers don't want cash ..... e.g. pay-and-display machines - I was fed up of having to have £4.20 ever day in correct change only. As with many new things, there are sceptics ..... but also, a bit like cheques, there will still be roles where cash is just the most convenient option.

For me - it's kept me in contracts for the past 2 years working on moving transit payment (bus, tram, ferry, train) to contactless. The biggest benefit is on bus, where you can reduce dwell times associated with passengers buying tickets. The first phase which is rolling out now is a simple cash alternative, but you still buy a ticket/pass. Next year most operators are looking to follow the London model and remove the need for a ticket .... just tap on (and possibly off) the bus/tram as you travel around, and at the end of the day (or week) it will work out the fare to charge. Benefit to passengers are quicker journeys (particularly on Mondays where buses are dwelling a lot for people to buy weekly tickets), more flexibility as you don't need to know at the start of the day which ticket you will need, and operators might need a handful fewer vehicles to run the same service pattern - but they also believe it will increase patronage, as the 'I haven't got the right change' problem will go away. The banks are sufficiently keen that they've worked with us to develop bespoke rules for transit payments - e.g. allowing us to take end-of-day contactless payment, removing the online auth requirement (too slow from a bus), and various other tweaks.

When you're in church this time next year, a contactless reader will be passed round with collection tray (seriously).

[Flyin'Dutch']

Would it be cynical in the extreme to assume that by paying electronically (contactless or not) the banks and government can also keep nice tabs on what individuals spend their dosh on?

Or am I a realist and right on the money?

[johnm]

@Flyin'Dutch' They will certainly have easy access to who you spend with, though not necessarily the precise goods and services, that's the retailer's interest and he will now know who you are as well as what you buy and that will begin to make store cards a bit redundant. Why give a punter Club card points if he gives the data free?

[rikur_]

@johnm - banks are encouraging retailers to include level II and level III data in their transactions - so they will sometimes know what the payment was spent on. For example when buying train tickets, this may include the class of travel, origin, destination, etc. This is primarily for corporate purchasing, as it simplifies expense claims, VAT handling, etc ........ I'd have to check contracts as to whether banks are actually allowed to use any of this data or just pass it on to the customer (usually the corporate account holder).

I did a project with one of the large high st banks in ~ 2000 where they identified business opportunities from statement data (e.g. they know that 11 months ago you made a payment to an insurance company, therefore now would be a good time to send you marketing of their insurance products) .... at that time the conclusion was that they couldn't legally use the data in this way, and the project went no further. Difficult to see how such an approach would be allowed with GDPR, unless customers explicitly consented, and even then it might not be considered a valid consent given the imbalance of power between bank and consumer.

It's also quite difficult legally to use a bankcard to create a customer profile ..... some of my current clients will be achieving this by encouraging their customers to 'register' their bankcard for other benefits (e.g. loyalty points), but as part of this will be giving consent to create a customer profile associated with your bankcard. But even this has its limitations, as e.g. the card number (PAN) used for contactless payments is different to the one that customers see printed on the card, and tools like Apple pay add a further layer of abstraction as the retailer never sees the card number.

[PaulB]

When you're in church this time next year, a contactless reader will be passed round with collection tray (seriously).

Seen that in the news this week!!

Thanks for the rest of your response to. The Flyer Forum at its best!!

[Irv Lee]

I seem to remember one of the Benelux countries doesn't use 1 and 2 cents any more, or they didn't when I was trying to get rid of some. The other annoying thing about move from pin to contactless is that I was pretty confident that I would not need to check bank statement individual transactions much as I guarded my pin well, but now, not so confident. The joke is the bank guarantee of taking the hit themselves if a problem transaction appears... what they mean is 'if you notice a problem transaction'

[Nick]

My feeling is that contactless payment is more likely to be pushed by HM government. It is in their interest to get rid of cash, if only to reduce the black economy.

Nick

[avtur3]

As a customer/consumer I must admit to preferring to use contactless where possible, I don't have any worries about security but there is one aspect of contactless that I can't quite come to terms with which is that I always take a paper copy of the transaction receipt from the card machine. I accept that this adds to the duration of the transaction which sort of negates part the advantage of contactless; I note that many people don't bother with a receipt.

It's probably contradictory to say that I trust the technology but still require a receipt, I've probably a bit of ocd going on. Similarly I will not use an ATM or automated petrol pump that warns that receipts are not available.

[rikur_]

The joke is the bank guarantee of taking the hit themselves if a problem transaction appears... what they mean is 'if you notice a problem transaction'

How different is that risk in the round to getting short changed?

Contactless is not risk free - it's a trade-off with convenience. We sometimes forget the risks with the alternatives - e.g. fake £20 notes, short changed, stolen wallet, stolen chequebook, hand in the till, etc. I've been using contactless since the pre-public trials, haven't yet had a transaction that wasn't mine (that I've noticed, and I think I would have noticed). I'm fairly sure in that time I've been short-changed somewhere (probably after a few pints), and had to pay £5 for a £4.20 parking fee many times.

[malcolmfrost]

My feeling is that contactless payment is more likely to be pushed by HM government. It is in their interest to get rid of cash, if only to reduce the black economy.

Nick

Exactly, it is one of the few! areas of disagreement with my wife who is a cash bric a brac dealer. The Boot sale industry will die.
Personally I think it is great but then I am paid monthly through PAYE.

[kanga]

I seem to remember one of the Benelux countries doesn't use 1 and 2 cents any more,..

Canada has withdrawn its 1c coins:

http://www.cbc.ca/news/canada/canada-s- ... -1.1174547

[IANAL, but AIUI:

on 'profiling' individual customers from cashless transaction history:

a. under GDPR, retailers will be severely restricted without explicit customer consent (which may, of course, be deviously obtained ..)

b. no Government agency would be able to do this without an explicit Warrant related to the individual, requiring RIPA-compliant cause (ECHR Art 8, IIRC); and this would have been trur in UK since 1997

As ever, happy to be corrected by the better-informed. ]

[flybymike]

The Boot sale industry will die.

Jobbing builders, plumbers, odd job men, gardners etc will suddenly find that their “official” turnover and their income tax payments have increased dramatically. They will then increase prices to maintain their income and cover their increased tax payments, and Joe Public will have to get used to paying VAT on such transactions as well.
Good for tax take but possibly bad for inflation.

[kanga]

..
Jobbing builders, plumbers, odd job men, gardners etc will suddenly find that ..
Good for tax take but possibly bad for inflation.

And bad for 'rogue' traders, we may hope ?