Our readies are heading for that cash till in the sky

As credit and smart cards take over, Sam Dunn asks if our wallets will one day be empty of everything except plastic
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The Independent Online

Together with the paperless office, the cashless society is often dismissed as nothing more than a fantasy. Yet the concept of stores and services that allow customers to pay only with plastic might not be as far-fetched as you think.

Marks & Spencer is piloting a number of self-service tills at selected branches across the UK, which will accept only debit and credit cards.

If they prove more popular than conventional tills, they could eventually become the main method of self-service payment throughout the chain.

"People seem happy buying cheaper items [with] their cards," says a spokeswoman for M&S. "But at the moment, we're at the 'wait and see' stage'."

A Post Office survey supports this view, revealing that nearly two thirds of 25- to 34-year-olds are comfortable using debit or credit cards for purchases costing £10 or less. A third of these also bought items under £5 on their cards.

Tesco's strategy for "cashless" stores has also been thrust into the limelight. Philip Robbins-Jones, its director of information technology development, admitted last week that plastic-only supermarkets were under consideration.

Retailers aren't the only pioneers, however. The snazzy blue plastic Oyster card lets its 2.5 million users zip around London's transport network thanks to the so-called Prepay feature. This allows commuters to put credit on the card - which uses micro- chip technology - rather than buying individual Tube and bus tickets.

Transport for London (TfL), which runs Oyster, now hopes to persuade retailers to accept what it calls its "e-purse" or "contactless smart card" and is about to approach pro- spective partners.

By early next year, Oyster customers should be able to pop into any of the 2,500 newsagents and other shops where the cards can already be topped up with cash, and use them to pay for inexpensive items such as a pint of milk or a newspaper.

On top of this, TfL is looking for major brands to join its network. The Starbucks coffee chain, which has its own pre-paid card system in the US, is understood to be inter- ested in signing up.

"It takes just a fifth of a second to put the transaction through," says TfL spokeswoman Amanda Brooks. "People don't have to mess around with change or pay with a credit or debit card."

But other attempts to introduce smart cards have proved less successful. In the 1990s, the Mondex card was put through pilot trials in Swindon. It never made it to the national stage because retailers were resistant to the cost of installing the technology, and customers, as well as having security fears, didn't feel comfortable dispensing with cash.

In today's more hi-tech society, that may not be such an obstacle. But cash is not the only old method of payment coming under attack. A week ago, Shell announced that customers buying petrol at any one of its 1,000 forecourts in the UK would no longer be able to pay by cheque.

"Less than 1 per cent of all transactions were being done by cheque," says Shell spokeswoman Berna- dette Cunnane. "The level of resources needed, in time and money [made these transactions uneconomic]. People are better served without them."

The death of the cheque is widely predicted. Last month, the Halifax claimed it would vanish by 2025. Only 2.1 billion cheques were written last year - down from 3.7 billion in 1990, it reported. The Association for Payment Clearing Services (Apacs) suggests cheque use has dropped 40 per cent in the past 10 years - and should fall again by the same margin in the next decade.

Last year we passed a milestone in the way we pay for our purchases. Although seven out of 10 transactions were in cash, the value of these deals (£272bn) slipped for the first time behind the total spent on debit and credit cards (£273bn).

By 2015, only half of all transactions will be in cash, Apacs estimates. "We have started to see a slow decline: this is the third year of a fall in cash use by consumers," says spokes-woman Jemma Smith.

"There's also the generational aspect, with people over 55 now happier to use cards instead of cheques. Plus, benefits are being paid into banks [instead of over the counter]."

Younger customers are embracing still more sophisticated innovations. More than six million Britons have now paid for goods through the online auctioneer eBay using its PayPal electronic cash system. And later this year, First Direct bank will let its customers use their mobile phone handsets to click a few buttons and top up their credit. The bank's head of e-futures, Jonathan Etheridge, describes this as one of the "baby steps" towards greater use of electronic and smart cards.

"The first step will be to top up your mobile phone," he explains. "The next might be to buy a lottery ticket or charge [an Oyster] travel card."

But he adds a note of caution. "As an industry, we have to not push the customer too far. There is a move towards a cashless society but it's at an incredibly slow pace."

Apacs' Ms Smith agrees. "Although [technologies] such as the travel card are already happening, there's no sign of cash disappearing yet. For many people, it's all there is and gives them a level of control they might not have with a card."

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