OT - why we need to keep cash

[MadAmster]

The figures aren't exact but the principle is. Read on McDuff......

Give you something to think about.

Why should we pay cash everywhere with banknotes instead of a card ?

- I have a £50 banknote in my pocket. Going to a restaurant and paying for dinner with it. The restaurant owner then uses the note to pay for the laundry. The laundry owner then uses the note to pay the barber. The barber will then use the note for shopping. After an unlimited number of payments, it will still remain a £50, which has fulfilled its purpose to everyone who used it for payment and the bank has jumped dry from every cash payment transaction made..

- But if I come to a restaurant and pay for digitally - Card, bank fees for my payment transaction charged to the seller are 3%, so around £1.50 and so will the fee £1.50 for each further payment transaction or owner re laundry or payments of the owner of the laundry shop, or payments of the barber etc..... Therefore, after 30 transactions, the initial £50 will remain only £5 and the remaining £45 became the property of the bank thanks to all digital transactions and fees.

[Ramshank72]

Though the bank owns the cash anyway, win - win in their book.
I mistakenly thought this was going to be some stats on Erin Cashin, didn't notice the OT. Oops!

[Geoff Parkstone]

It's a fair observation MA, but cash has a handling cost in that processing (and banking) the receipt via bank charges and admin is more expensive than handling a digital transaction. If it was simply a banknote circulating cash in hand to cash in hand and hidden under mattresses the I'd agree. But the clearing banks have always had their cut, it's just a different knife.

I don't think the bank owns the cash Ramshank, although perhaps the bank of England has a legal ownership of the piece of paper as it is the guarantor of the circulatory promissory note it represents. I've often wondered if I could head to Threadneedle Street and claim my gold equivalent but I suspect that possibility has long gone

[Ramshank72]

It's probably been pawned through Cash for Gold anyway, so save the train fare!

[swaledale]

The figures aren't exact but the principle is. Read on McDuff......

Give you something to think about.

Why should we pay cash everywhere with banknotes instead of a card ?

- I have a £50 banknote in my pocket. Going to a restaurant and paying for dinner with it. The restaurant owner then uses the note to pay for the laundry. The laundry owner then uses the note to pay the barber. The barber will then use the note for shopping. After an unlimited number of payments, it will still remain a £50, which has fulfilled its purpose to everyone who used it for payment and the bank has jumped dry from every cash payment transaction made..

- But if I come to a restaurant and pay for digitally - Card, bank fees for my payment transaction charged to the seller are 3%, so around £1.50 and so will the fee £1.50 for each further payment transaction or owner re laundry or payments of the owner of the laundry shop, or payments of the barber etc..... Therefore, after 30 transactions, the initial £50 will remain only £5 and the remaining £45 became the property of the bank thanks to all digital transactions and fees.

As has ben said, handling cash costs more than card payments for businesses IF they use the bank. Of course removing cash would also remove a considerable amount of the "black" economy (not sure if one calls it that these days!), which could result in millions of pounds of tax being paid to the . Maybe if we want viable public services we need to avoid paying cash.

[SithHappens]

Have to admit i love being able to use my contactless more, i used to think it was wrong for low amounts but since covid its become more acceptable. No messing around in busy bars waiting for change, just pay and go, much easier.

Also seems i dont get through money as much not having it in my pocket, i know it doesnt make sense but if i go to the shop now, pay on card, done, before id maybe draw out 10,20 or more and always seem to make the difference disappear without having anything to show for it.

[SithHappens]

As has ben said, handling cash costs more than card payments for businesses IF they use the bank. Of course removing cash would also remove a considerable amount of the "black" economy (not sure if one calls it that these days!), which could result in millions of pounds of tax being paid to the . Maybe if we want viable public services we need to avoid paying cash.

It would be more than millions, it would be billions if cash in hand payments were eliminated.

Amazes me how much it still happens really, a mate of mine regularly gets paid cash in hand to the tune of over 1k a week, who has that lying about? And the thing is those customers get no discount, they can pay by cheque, card, bank transfer, whatever really.

He is always buzzing when he has finished a 'cash job' as its all going in the back pocket.

I dont know how he gets away with it as although technically self employed his work is supplied by the same company each week, so there is of course a paper trail, i guess thats only going to be an issue if it was ever investigated though.

Also amazes me how accepting the public are of those who do cash in hand jobs, yet are critical of other people or companies who pay less tax through legal routes. Individually of course they don't amount to a huge amount but collectively those around the country who take payment this way are avoiding billions in tax.

What do you do though? People are hard enough to come by anyway to do work for you, so if you refuse to pay them the requested method then they probably arent going to do the work you want.

[MadAmster]

1000 quid on the books, roughly 700 quid cash in hand. Apart from the tax authorities, everybody wins. On the books 1000 becomes around 800 when you factor in VAT. Another 300 income tax and there's 500 left. Your "contractor" ends up 200 better off and so does the customer with a cash payment.

Easy to see why it happens. It's morally and legally wrong but very understandable, especially if you're short on funds and something genuinely needs doing in a hurry.

[SithHappens]

I think the thing is everyone who does it thinks either 'my bit wont make much difference', or 'everyone else does it so i will too'

Id probably say its fine if an extra job is done at a weekend for a mate or something, but when its week in week out it just seems wrong.

[MadAmster]

I do know that, here in NL, the tax is pretty cute on things. They have an idea of what builders, for instance, charge. They also have the VAT returns so know how much material has been bought. If there appears to be a discrepancy between materials and time they will do a full audit. Builders will do the odd job off the books but they have to be careful with how many they can "get away with".