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Our Response to the UK Treasury Consultation "cash and digital payments in the new economy"

The Treasury, on behalf of the British Government, has launched a consultation entitled "cash and digital payments in the new economy".

This consultation has already inspired a storm of protests, for casually suggesting the UK can do without 1p and 2p coins.

NOT A GOOD START.

The consultation document erroneously implies that only the poor or criminals "need" to use cash.

This ignores the MAJORITY of the population who CHOOSE to use cash for their own entirely legitimate and lawful reasons. Reasons such as wishing to be independent, have real personal freedom without the need for constant 3rd party authorisation and, of course, a little privacy.

Below, our Chairman responds to this seriously flawed consulation. After "A" you will find his responses.

WE URGE YOU TO RESPOND BEFORE THE CLOSING DATE OF 5 JUNE 2018.

The detailed consultation paper can be found here: https://www.gov.uk/government/consultations/cash-and-digital-payments-in-the-new-economy

 

Box 2.A: Questions

Future of digital payments

1 How do you expect digital payment methods, and the adoption of these by merchants and consumers, to change over the next 10 years? What are the drivers of this?

A. With all the $Millions being spent by Card Schemes, their partner banks and App promoters on marketing, the public are almost bound to be seduced/ persuaded to use such payment methods more. The only thing likely stop this would be huge online frauds, which would rightly frighten the public.

Drivers of choice of payment method

2 What further action could the government take to support greater adoption of digital payments by merchants and consumers (including civil society groups)? 

A. Fight online fraud.

3 Are there international examples of countries supporting the adoption of digital payments that the government should look to?

A. Singapore (NB: which also has the busiest ATMs in the world)

Supporting businesses to use digital payments

4 Why does the cost of processing payments differ between cash and digital payments? How is it changing? And do you expect the change to continue?

A. The British Retail Consortium each year produces an analysis which shows cash is the cheapest method for their members - 80% of all major UK retailers - to process. This will only change through short-term manipulation of costs by the Card Schemes. This they are very adept at doing. If they were ever to succeed in eliminating their main competitor – CASH - the Card Schemes would automatically increase their charges to maximise their profits. It is their duty to do so as public companies, whatever the damage to the Public Interest.

Box 3.A: Questions

5 Who uses cash as their main form of payment and why?

A. It is not a question of “main form of payment”. Many people choose to use cash for their own legitimate and lawful reasons, which should be respected. Nearly 3 Million people in the UK use cash as their ONLY form of payment. This will surely increase as Financial Inclusion is further undermined by the actions of anti-cash vested interests.

6 How does cash usage and need vary by demographics, geography, and socio-economic status?

A. Members of the general public in all parts of the country and from every demographic and socio-economic group use cash. This is their choice to make. Cash users should NOT be “typecast” by the UK government. That would simply play into the hands of the anti-cash vested interests.

Box 3.B: Questions

7 How does the level of cash that you handled or used this year compare to what you handled or used five years ago? What are the drivers for that change (for example, change in customer preferences, and currency modernisation programmes such as new polymer banknotes and £1 coin)?

A. I personally use more cash than ever, as a matter of choice. However, there is no doubt that more people are using cards and other payment methods more often than they did 10 years ago. Most of the reasons for doing so have simply been hyped by the Card Schemes and other non-cash payment “pushers”. The genuine overall benefits to the average consumer are often non-existent or, at best, significantly exaggerated. For example, queuing time in retail establishments has NOT reduced significantly, simply because most people are not ready to pay when they reach the check out. It is the search for payment methods in handbags, wallets and pockets that causes delays.

8 How do you think the level of cash you will handle or use in five years will compare to what you handled or used this year? What are the drivers for that change? And how will different sectors be impacted by this change?

A. I will handle more cash than ever and encourage all my contacts to follow my brilliant example. The anti-cash vested interests will NEVER be allowed to win.

9 What impact has the change in demand had on industries that process cash?

A. Very few so far. However, the disgraceful attempts to reduce the number of ATMs in the LINK ATM NETWORK could bring about adverse changes, if allowed to happen, which they must not be. UK ATMs are amongst the busiest in Europe. Reducing their numbers to fill the coffers of anti-cash vested interests would be a disgrace and very much against the Public Interest.

Box 3.C: Questions

10 Does the current denominational mix (eight coins and four banknotes) meet your current and future needs? If not, how should it change?

A Yes, though I would prefer to have a £100 note in circulation - most countries have a higher-denomination note that the £50 variety, which is the highest in England - but will settle for a new polymer £50 note being issued. Switzerland, a model country as far as most fair-minded people are concerned, has a 1000 Franc note. As examples go, a very good one to follow.

11 Have you made, or do you intend to make, any changes to the way that you accept cash due to the change in demand (for example, implemented rounding, restricted the use ofcertain denominations, or changed machines so that they no longer accept cash)?

A. Any change in demand at payment method level has been largely artificially created. With the value of currency in circulation increasing each year, I have no intention of succumbing to the blandishments of the anti-cash vested interests.

12 What measures can be taken to ensure that coins of denominations that are needed remain in active circulation and do not fall dormant, either with the public or at cash processors?

A. We need to see note and coin deposit and recycling ATMs installed in every community worthy of the name in the UK. This innovation, which is vital to the smooth circulation of cash for businesses and individuals, can be achieved through a transaction ALREADY available on the LINK ATM NETWORK. It should be made MANDATORY for all Card Issuers, so that all ATM operators can install deposit and recycling machines around the UK. This would remove the need for the public and businesses to go to a branch of their own bank to deposit and withdraw notes and coins. With bank branches disappearing fast, this is a vital innovation.

13 In what circumstances is a £50 note used in routine transactions and why (rather than multiple lower denomination notes)?

A. For high value transactions, it is clearly better to be able to use £50 notes. Fairly obviously, ten £50 notes fit better into a wallet than fifty £10 notes. Also, of course, many people legitimately use banknotes as a store of value and £50 notes are easier to store.

Box 3.D: Questions

14 How were counterfeit £1 coins able to enter circulation and circulate freely?

A. The old style was very easy to copy and the copies were easily passed off in change and used in machines. The new model is much harder to counterfeit successfully, at a viable cost to criminals.

15 When and how are / should coins be checked in the cash cycle, both now and in the future?

A. All coins should be capable of being machine checked when recycling is attempted by users.

Box 3.E: Questions

16 Are there other international examples of countries managing a decline in demand for cash that the government should look to? Should the UK follow a similar pathway as other countries in modernising the currency?

A. Only a couple of countries in the world are seeing a decline in cash in circulation. In countries where there are declines, these have usually been created by manipulation of supply by anti-cash vested interests e.g. Sweden. To follow their example would be against the interests of the British public. The Swedish government is now considering FORCING banks to offer cash services at every branch. The UK government should consider taking the same step.

Cash still accounts for 85% of retail payments worldwide and the European Central Bank recently issued survey results showing 79% of household purchases are still made using cash.

Anti-cash vested interests must not be allowed to manufacture declines in cash use in the UK.

Box 4.B: Questions

17 In which sectors or circumstances is cash usage likely to increase tax evasion, hidden economy, and money laundering risks?

A. There is no evidence that cash is fundamental to ANY tax evasion or illegality. High-worth individuals and corporations make an art-form out of tax avoidance  and evasion.

18 What further action should the government take to reduce tax evasion, hidden economy, and money laundering associated with cash to ensure a fair and level-playing field for tax compliant businesses?

A. None. The government should spend its time and money in the fight against cyber-crime. That is the REAL threat to the future of payments and, indeed, the economic health of every nation on the planet.

19 The government knows that businesses and individuals still use large cash transactions, and wants to understand in what businesses or sectors are large cash transactions considered necessary or more acceptable? What are the barriers to using digital payments for large transactions?

A. The barrier to digital payments is often simply choice. Why should individuals or businesses put all of their economic activity through avaricious international Card Schemes?

Box 4.C: Questions

20 How can the government use behavioural insights and nudge techniques to address cash related tax evasion, hidden economy, and money laundering?

A. Concentrate on fighting tax avoidance and evasion by high net-worth individuals and corporations. 

21 How can government encourage declarations of activity paid for by cash across the economy, including individuals, intermediaries and businesses (such as encouraging or mandating the use of receipts)?

A. See my answer to question 20. This would be a wasted effort, just like the appalling and botched attempt at demonetisation in India. That, by the way, was a crime against humanity. No UK government could even contemplate something similar and hope to survive.

Box 4.D: Questions

22 Are there other international examples of countries which have tackled tax evasion and money laundering associated with cash that the UK should look to?

A. No good positive examples. Just the Indian example to avoid.

23 Should the UK follow a similar pathway to other countries and implement a cash transaction limit? If so, what would be an appropriate threshold?

A. No limit necessary - but if a meaningless/token gesture is required, make the limit £20,000.                                                                                                                                         

Ron Delnevo

Chairman

Cash and Card World Limited

Friday, 23rd March 2018

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