Fantastic plastic: Cards beat cash as the way to pay

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The Independent Online

It started as a convenient means for 200 travelling salesmen to pay for lunch. Some 50 years later, "plastic" has overtaken cash as the nation's preferred method of paying for goods and services.

It started as a convenient means for 200 travelling salesmen to pay for lunch. Some 50 years later, "plastic" has overtaken cash as the nation's preferred method of paying for goods and services.

Figures published yesterday showed that the value of purchases with credit and debit cards in Britain this year will be more than £269bn, exceeding for the first time transactions made with notes and coins, which will reach £268bn.

The statistical landmark underlines Britons' increasing preference for using plastic cards to make purchases from the weekly groceries to ordering goods over the internet.

In 1997, cards accounted for about £120bn of expenditure, less than half current levels. By 2013, they will be used to pay for goods worth an estimated £430bn - dwarfing cash transactions by two to one. Paul Rodford, policy director of the Association of Payment Clearing Services, which oversees electronic transactions and produced the statistics, said: "Cards will never replace cash completely but certainly there has been a dramatic change in the way people prefer to pay for what they buy.

"There is a feeling that cards are more convenient and secure than cash to make purchases above a certain value. Within 10 years cards will be used in double the transactions where is used. It has reached the point where without plastic cards, society would grind to a halt."

The world's first credit card, Diners Club, was issued in 1950 to allow American salesmen to pay for meals when wining and dining clients. It was initially valid in 14 restaurants in New York and used by 200 people. Since then the use of cards has grown massively with an estimated six billion now issued worldwide. In Britain last year there were nearly five billion plastic transactions using more than 160 million separate cards. Britons now have an average of three debit, credit or cheque-guarantee cards each.

The figures are the first time Apacs has published detailed statistics on the use of credits cards. The industry said it was expecting a further increase in use of plastic over the next year thanks to new, fraud-proof, "chip and PIN" cards.

But despite the booming popularity of plastic, the industry's attempts entirely to replace cash have foundered. Trials of Mondex, a new type of card developed to act as an electronic purse "loaded" with virtual cash, were dropped in 2001. Ironically, the new dominance of cards has served only to boost the confidence of coin traders. Paul Barthaud, executive director of the London coin dealer Spink, said: "If coins and banknotes are to become rarer then it will only increase their value."

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