Payment cards are first step towards making cash obsolete
If banks and major retailers have their way, notes and coins may soon be redundant, says David Prosser
Saturday 24 September 2005
On Wednesday, Mastercard launched Cashplus, the first UK version of the pre-paid plastic cards that are hugely popular in the US. You don't need a bank account to use a Cashplus card - Mastercard has a deal with the Post Office that enables people to charge up their cards with money at its 14,000 branches.
The launch is another step towards reducing people's reliance on cash. Although Cashplus cards can be used to withdraw money from ATMs, the £2 transaction fee is a disincentive. The fee for using Cashplus to pay for goods and services - in the same way as a debit card - is only £1.
If Cashplus proves successful, rival card issuers are likely to launch their own products. Visa is trialling the Gift card, launched as a replacement for paper gift vouchers; American Express is experimenting with a prepaid cashcard for use as a modern version of traveller's cheques.
The Cashplus card is also similar to an initiative from Oyster, the card that many Londoners use to pay for public transport. It is looking for banking and retail partners to help it expand the usage of Oyster, so that cards, once charged with cash, can be used in London shops, as well as to pay for bus or train fares.
Previous attempts to launch such products have not proved popular - card-issuers spent years trialling Mondex in the Nineties before shelving the project amid widespread disinterest from retailers and customers.
However, research from Apacs, the organisation that runs Britain's payment systems, shows cash is becoming less important. This month it revealed that the amount of money spent on plastic in 2004 outstripped the total spent using cash for the first time, chiefly thanks to the increased use of debit cards.
Apacs also warns that cash remains hugely popular with consumers. "Seven in 10 transactions last year were cash deals," says Apacs's Jemma Smith. "People like the safety of cash, particularly for small purchases, and we think cash will still represent 50 per cent of transactions in 10 years' time." Even so, Smith believes both the financial services industry and leading retailers are keen to reduce customers' reliance on cash. "I don't think they have a strategic plan to do away with cash, but there are clear reasons why retailers and banks like plastic."
The problem with Cashplus, however, is the cost. Customers must either pay £4.95 a month for the privilege of holding the plastic, or accept fees of £1 and £2 a time on spending and cash withdrawals. "It's hard to believe that the charges for opening and using the card reflect the real costs of delivering the service," says Claire Whyley, deputy director of policy at the National Consumer Council.
Rich Wagner, chief executive of Advanced Payment Solutions, which is introducing Cashplus in a joint initiative with Mastercard, points out that the card is primarily aimed at people who don't have access to traditional bank accounts. Although banks must now offer basic accounts to such customers, these are limited, Wagner argues.
"Our first target is the customer who has been disenfranchised by the financial community," says Wagner.
How everyone can save money online
"There is definitely a need to provide a payment option for people who want to shop online but are denied access to cheap credit," says Richard Mason, of price comparison service Moneysupermarket. He says 75 per cent of applications for the best credit deals are turned down, because borrowers' credit ratings aren't good enough.
At the extreme, financially excluded customers lose out twice over. "The internet is one of the best ways to save money because the best deals on so many things are now found online," says Mason. "But you need a card of some sort to pay for internet purchases."
Mastercard's Cashplus deal would extend the option of online shopping to people previously denied access, Mason admits. But he warns: "This is a very expensive option."
He suggests would-be internet shoppers apply for an uncompetitive credit card deal - Capital One's Classic card (29.9 per cent interest) is a good bet, he suggests - for which they are more likely to be accepted.
"People don't realise that you are allowed to put cash into your credit card account, so you never have to actually use the card to borrow and you never pay any interest," he says.
- 1 Michelle Watt's father says TV presenter killed herself because she was in constant pain
- 2 Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
- 3 'Help me I'm trapped in a factory' messages keep being found on bottles of vitamin water
- 4 North Korean defector flees to Finland 'with evidence of chemical testing on humans'
- 5 Greek debt crisis: The photograph that conveys the despair of Greece's elderly
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Greece crisis: The wider lesson is that it’s time to abandon this failed experiment in currencies
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
iJobs Money & Business
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...
Day In a Page
Previously two semi-detached properties, this five-bedroom home is spread over three floors with a large breakfast kitchen, orangery, office and gym on the second floor.
This five-bedroom home enjoys countryside views over the Blyth estuary to Southwold, offering flexible living space with a ground-floor annexe - ideal for use as a holiday let.
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B or countryside retreat, subject to change of use permissions.
This Grade II-listed three-bedroom home is situated on a private road, just a short walk from the sandy beaches of Frinton-on-Sea.
Less than five miles from Malmesbury, this four-bedroom cottage comes with equestrian facilities and gardens that extend to approximately three acres.
Spanning three storeys, this late-Victorian five-bedroom farmhouse is a spacious family home with a modern interior and B&B potential.
With an original church arch, this triplex one-bedroom church conversion has a light, spacious, feel and comes with a secure off-street parking space.
This recently-refurbished three-bedroom home has bi-folding doors that lead out to a decked seating area - ideal for alfresco dining this summer.
Well-located for coastal walks and popular restaurants, this detached four-bedroom home offers views over farmland, to the Solent, the Purbecks and Bournemouth.
If you love high ceilings, school conversions like this one are bang on the money. This two-bedroom flat is minutes from Burgess Park and the foodie haven at Borough Market.
Set within a church conversion in Bermondsey, this two-bedroom maisonette combines existing features, such as original arches and brickwork, with a contemporary finish.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
This four-bedroom home offers a vaulted ceiling in a breakfast room that's ideal for summer entertaining with doors that open to the patio and garden.
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.