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A Penny for Your Thoughts? Not Anymore
(28-03-08) - With the credit crunch forcing banks to withdraw free services and increase mortgage rates, it’s now the humble 1p and 2p coins that could become the next victims of this financial lull.
Cash deposits and withdrawals account for a greater proportion of direct processing and transaction costs for banks than any other payment method, but banks are growing increasingly weary at the amount of money it costs them to order, count and ship these smaller value coins around.
Could the 1p and 2p pieces go the same way as the half-penny piece? Banking analyst Lee Goodwin suggests this is an unrealistic forecast:
‘The 1p coin is so iconic that they will find it difficult to think of getting rid of it, even if everybody would prefer it if we did.’
There was an estimated £108m-worth of 1p pieces in circulation in the UK at the end of March 2007, according to the Royal Mint.
Sandra Quinn, a spokesperson for UK payments association APACS, argues the ‘increased efficiency’ that removing 1p and 2p pieces will afford banks far outweighs ‘any issues of tradition’.
The cheque is another payment method under threat. APACS has recently consulted on the possibility of the cheque clearing system, and therefore all cheques, disappearing by 2018.
Chris Eagle, Commercial Manager at CreditChoices, has seen cheques and small coins swallowed by direct debit and debit cards:
‘Your local post office counter, once the bastion of cheque payments, now houses a chip and pin unit. Even McDonalds accept chip and pin payments, with many now choosing to pay for their burgers via a debit card. Touch payments such as the Barclays Onepulse(www.barclays.co.uk) card are only driving the pennies and cheques further into the ground.’
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