Is the use of cash dying out?

[Gloster]

Is there a reason (other than 'rules') why you couldn't hand the shop keeper £3.30 and have that loaded to your card? Or even hand him the £10, ask him to load £3.30 and receive £6.70 in change?

And how long will it be before there is a charge of £1?

 

[DelayRepay]

You can't read the PIN from it but you can surely get the card number and expiry date, else how would you bill the account?

What you can't easily then do is write another chip, though.

You're right - you can read the same details that you could read from the magnetic strip (although I believe this is called 'shimming' rather than 'skimming'). You can't write those details to another chip but you can write them to a magnetic strip. There ware still some ATMs in some countries that fall back to reading the magnetic strip if they can't read the chip, so you can use cloned cards in those ATMs to withdraw cash if you know the PIN.

The shimming devices are tiny. They take advantage of the fact that cards aren't as thick as they used to be, but the terminal still has to accommodate the older, thicker cards. So there's a little bit of space to insert the device. They even take their power from the terminal.

I was getting a bit mixed up, sorry. I was thinking of when we investigate fraud. If the alleged fraudulent transaction was made using a chip, it's not going to be a cloned card. If it was made using mag strip then a cloned card can't be ruled out.

 

[duncanp]

Is there a reason (other than 'rules') why you couldn't hand the shop keeper £3.30 and have that loaded to your card? Or even hand him the £10, ask him to load £3.30 and receive £6.70 in change?

No there isn't.

TfL should amend "the rules" to make it possible to add whatever amount the customer wants to their Oyster card.

This reflects what currently happens at the ticket machines on the tube.

If you want to add, say, £1, to your Oyster card balance, you can do this at a tube station ticket machine using coins. But if you want to top up at the same machine using a card, the minimum amount is £5.

 

[Ediswan]

The shimming devices are tiny. They take advantage of the fact that cards aren't as thick as they used to be, but the terminal still has to accommodate the older, thicker cards. So there's a little bit of space to insert the device.

Source please.

 

[tomuk]

You can't skim a chip. But you can skim the old fashioned magnetic strip, if the card still has one.

I was using skim in a colloquial sense. I just looked and it was 15 years ago.

Petrol station scam funds Tamil Tigers

Motorists who use credit and debit cards to buy petrol are thought to have lost millions of pounds in an international 'skimming' scam believed to have funded Sri Lankan rebels.

www.theguardian.com

 

[Enthusiast]

Wouldn't surprise me if some would prefer to pay a tradesman cash to avoid VAT, though - that sort of tax fraud is very common indeed.

Just on a point of order, it is not fraudulent to pay a trader (by any method) for a job at a price that has been quoted without VAT. It is his duty to collect and pay VAT on his enterprises (after he has reclaimed the VAT he has paid on materials, etc.). The customer has no duty to ensure he does so and how the trader conducts his tax affairs is of no concern to him. I will always pay cash if a tradesman gives me the opportunity to do so without the addition of VAT. It's one of the rare occasions I need to visit a bank. I've no real concern if or how they cook their books.

 

[tomuk]

In my view all businesses should be VAT registered and Ltd companies. With appropriate reform of the reporting requirements. If supplying non business customers there is no need to breakdown the VAT anyway.

 

[Deafdoggie]

In my view all businesses should be VAT registered and Ltd companies. With appropriate reform of the reporting requirements. If supplying non business customers there is no need to breakdown the VAT anyway.

The cost of living is quite high enough without forcing all businesses into adding VAT onto the prices.

Source please.

I'd imagine his own eyes!

 

[tomuk]

The cost of living is quite high enough without forcing all businesses into adding VAT onto the prices.

So all your suppliers are small businesses with a low turmover?

 

[Deafdoggie]

So all your suppliers are small businesses with a low turmover?

No. But I use local tradesmen and local shops some of which aren't VAT registered.
I also use sole traders who are cheaper because they don't have to have the expenses of a limited company.

 

[Magdalia]

In my view all businesses should be VAT registered and Ltd companies. With appropriate reform of the reporting requirements. If supplying non business customers there is no need to breakdown the VAT anyway.

The requirement for businesses to register for VAT has always had a turnover threshold, because it is recognised that VAT is a significant administrative burden that discourages small business formation.

For most sole traders, their own time is the most significant element of what they charge. If they choose not to register for VAT, then they will pay VAT on all of their supplies. For example, say you employ a non-VAT registered plumber to fit a new tap. The plumber will have to pay VAT when he buys the tap because he doesn't have a VAT number.

If you pay that plumber in cash, the plumber could decide not to declare the income, so the main tax fraud risk is on income tax not VAT. If you want to minimise that risk, ask for an invoice.

 

[Phil56]

In my view all businesses should be VAT registered and Ltd companies. With appropriate reform of the reporting requirements. If supplying non business customers there is no need to breakdown the VAT anyway.

I actually agree with this. Never used to, but now I've become a convert.

Costs of being a limited company are now minimal compared with being a sole trader or partnership. A few decades ago, you needed an expensive statutory audit, but that was scrapped for the smallest companies about 25 years ago. There have been repeated relaxations in the format of limited company accounts and filing obligations, so now the accounts are pretty simple, in fact, only a simplified balance sheet required to be filed at Companies House. There's really no need for accountants/book-keepers to charge a lot more for a limited company as opposed to sole trader or partnership accounts anymore. The main "extra" is payroll for the directors and an extra tax return, neither of which take much time!

VAT is always going to be a problem. The current £85k threshold causes businesses to hold back from growth, i.e. loads of small shops, fast food outlets, etc deliberately reduce their opening hours and even close for a few weeks each year to keep their turnover below the threshold. I know of a small private hotel that have permanently closed a few of their rooms to keep their turnover under £85k. If the limit was a lot lower, then they'd be "free" to expand and develop their businesses to the fullest of their potential. It's noticeable that the VAT threshold is much lower in most other EU countries and in some, I believe, the threshold is Zero, i.e. a business has to register from day 1! The VAT threshold also causes unfair competition, i.e. smaller firms can charge the same and make more profit (such as small retailers, small fast food etc) - after all, your tiny non VAT registered corner shop doesn't sell Mars Bars cheaper than the larger Spar shop down the road!

As for admin burden, there's the flat rate scheme available for smaller businesses which eliminates most of the onerous book-keeping/admin burdens and makes VAT returns far simpler. It's also noteworthy that from 2024, even sole traders and partnerships will have to make electronic returns to HMRC every 3 months of their income/expenses, which is an equivalent or greater burden than VAT returns. They will have to do book-keeping via software to make the quarterly income tax returns, and if they can do that, then doing quarterly VAT returns is virtually no extra work!

I firmly believe that it's far too easy (and cheap in fact free) for people to set up a business in the UK. There's no official business register, no real monitoring of businesses, no barriers to entry of most businesses, etc. That's why we have so many con-merchants and amateurs ripping people off and giving poor service.

Much as I didn't like him, I think Gordon Brown had the right idea of announcing lower tax rates, business incentives, etc., ONLY to limited companies as he clearly wanted to encourage small businesses to start up/convert as limited companies to increase supervision/monitoring via Companies House.

 

[DelayRepay]

Source please.

Industry knowledge, but it's in the public domain e.g. this site: https://krebsonsecurity.com/2021/02/checkout-skimmers-powered-by-chip-cards/

 

[Ediswan]

Industry knowledge, but it's in the public domain e.g. this site: https://krebsonsecurity.com/2021/02/checkout-skimmers-powered-by-chip-cards/

OK, the change is that some/many* new cards are no longer embossed. The base card remains the same thickness (IS0 7810, ID-1, 0.68-0.84 mm). My new non-embossed credit card is at the top of that range.

Thing is, there are plenty of embossed cards still about. I have one which has several years left. If the skimmer is dependent on the absence of embossing, surely if an embossed card was used, it would jam, and thus attract attention. (I don't doubt the skimmers exist, it is the exact dimensions which interest me)

* I do not know the proportion.

 

[nlogax]

and by then it will be too late to care.

Without wanting to negate your post - because I do understand and appreciate the contents of your broader points - I feel it's already too late to care. Certainly when it comes to the dwindling role that cash plays in our payments culture as opposed to more trackable means. I'm afraid to say that ship sailed long ago.

I do not accept that cash will cease to exist as a means of payment in wider society though.

It's inevitable. It may even be 50-100 years out but it will happen. By that point neither of us will be around to witness it but if I could put money on it (maybe even hard cash!) I would.

 

[Enthusiast]

In my view all businesses should be VAT registered and Ltd companies. With appropriate reform of the reporting requirements. If supplying non business customers there is no need to breakdown the VAT anyway.

In my view VAT should be abolished and replaced with a simple end-user purchase tax. If you wanted to devise a more complex and burdensome tax you'd be hard pushed. It places an enormous burden on traders who spend a lot of their time paying VAT only to claim most of it back (effectively lending money to the Exchequer free of charge). The work they face doing this is considerable and provides them with no benefits whatsoever. The burden on the taxpayer in having to employ armies of scribes to administer what is arguably one of the most ridiculous taxes ever devised is also considerable.

 

[duncanp]

It's inevitable. It may even be 50-100 years out but it will happen. By that point neither of us will be around to witness it but if I could put money on it (maybe even hard cash!) I would.

If they were going to get rid of cash, they would have to ensure that everyone has access to at least a basic bank account, with an associated contactless card, and also a decent broadband connection, so that you can check the balance on your card.

A solution would have to be worked out for those who still rely on cash, who are often the poorest and most disadvantaged in society.

 

[johncrossley]

In my view VAT should be abolished and replaced with a simple end-user purchase tax. If you wanted to devise a more complex and burdensome tax you'd be hard pushed. It places an enormous burden on traders who spend a lot of their time paying VAT only to claim most of it back (effectively lending money to the Exchequer free of charge). The work they face doing this is considerable and provides them with no benefits whatsoever. The burden on the taxpayer in having to employ armies of scribes to administer what is arguably one of the most ridiculous taxes ever devised is also considerable.

The vast majority of countries use VAT and not American style sales taxes. Looking at the map on Wikipedia, the US is the only major developed economy that doesn't use VAT.

Value-added tax - Wikipedia

en.wikipedia.org

Value-added tax avoids the cascade effect of sales tax by taxing only the value added at each stage of production. For this reason, throughout the world, VAT has been gaining favor over traditional sales taxes. In principle, VAT applies to all provisions of goods and services. VAT is assessed and collected on the value of goods or services that have been provided every time there is a transaction (sale/purchase). The seller charges VAT to the buyer, and the seller pays this VAT to the government. If, however, the purchasers are not the end users, but the goods or services purchased are costs to their business, the tax they have paid for such purchases can be deducted from the tax they charge to their customers. The government receives only the difference; in other words, it is paid tax on the gross margin of each transaction, by each participant in the sales chain.

A sales tax incentivizes vertical integration and therefore discourages specialization and trade due to the fact that it taxes the full value of the product at each stage of production, instead of only the value that has been added to the product.

In theory, sales tax is normally charged on end users (consumers). The VAT mechanism means that the end-user tax is the same as it would be with a sales tax. The main disadvantage of VAT is the extra accounting required by those in the middle of the supply chain; this is balanced by the simplicity of not requiring a set of rules to determine who is and is not considered an end user. When the VAT system has few, if any, exemptions such as with GST in New Zealand, payment of VAT is even simpler.

 

[AM9]

In my view VAT should be abolished and replaced with a simple end-user purchase tax. If you wanted to devise a more complex and burdensome tax you'd be hard pushed. It places an enormous burden on traders who spend a lot of their time paying VAT only to claim most of it back (effectively lending money to the Exchequer free of charge). The work they face doing this is considerable and provides them with no benefits whatsoever. The burden on the taxpayer in having to employ armies of scribes to administer what is arguably one of the most ridiculous taxes ever devised is also considerable.

Traders don't 'pay VAT only to claim it back'. The clue is in the name Value Added Tax, i.e. the difference between the purchase price of the goods (and/or the services/facilities to provide them) and the selling price which will normally be higher. It's the difference between the two prices that is taxable. VAT registered businesses record their costs (inputs) and subtract them from the sales (outputs) and present them in their accounts on which the tax is calculated. There is no paying tax and then getting some back, - it's all done on paper (or online now).
Before VAT was introduced in the UK in 1973, there was Purchase Tax, a complex system witrh multiple rates that endeavoured to put a tax rate that related to the item's luxury value. That tax was applied at source or manufacture and didn't vary even if the retailer doubled the price. Thus the retailer was effectively untaxed. It was chaotic as hardly anybody outside the retail trade knew what the rates were.

 

[Dai Corner]

Traders don't 'pay VAT only to claim it back'. The clue is in the name Value Added Tax, i.e. the difference between the purchase price of the goods (and/or the services/facilities to provide them) and the selling price which will normally be higher. It's the difference between the two prices that is taxable. VAT registered businesses record their costs (inputs) and subtract them from the sales (outputs) and present them in their accounts on which the tax is calculated. There is no paying tax and then getting some back, - it's all done on paper (or online now).
Before VAT was introduced in the UK in 1973, there was Purchase Tax, a complex system witrh multiple rates that endeavoured to put a tax rate that related to the item's luxury value. That tax was applied at source or manufacture and didn't vary even if the retailer doubled the price. Thus the retailer was effectively untaxed. It was chaotic as hardly anybody outside the retail trade knew what the rates were.

I hadn't realised Puchase Tax worked like that. I thought it was a percentage of the retail price paid. It should have been called Production Tax if applied 'at the factory gate'!

 

[AM9]

I hadn't realised Puchase Tax worked like that. I thought it was a percentage of the retail price paid. It should have been called Production Tax if applied 'at the factory gate'!

That was the problem. The rates were changed quite frequently which wouldn't really be apparent to the end purchaser unless the retailer raised the price to protect his profit. The obverse would happen if the PT rate was lowered, the retailer might just take the extra profit. All in all it was a great improvement when VAT was introduced, although like decimalisation and metrication, there were those who just couldn't handle change at all. Fortunately, general the public didn't really know much about PT rates, so the problem of change, although trivial, fell on the retail trade.

 

[MikeWM]

Without wanting to negate your post - because I do understand and appreciate the contents of your broader points - I feel it's already too late to care. Certainly when it comes to the dwindling role that cash plays in our payments culture as opposed to more trackable means. I'm afraid to say that ship sailed long ago.

I strongly suspect you're right, and I'm already resigned to the fact I'm going to lose on this issue [1], but I feel strongly enough about it to try to put up a small amount of resistance, for all the use it will (won't) do.

[1] well, until a big solar flare or a nuclear attack or similar causes a sufficiently large EMP to destroy all electronic equipment, but the total chaos that would result after that would be even less fun to live through than a highly authoritarian and totally tracked and controlled society :-/

 

[route101]

More likely an error, i.e. they were 25p and the shop owner entered £25 by mistake. Always read the amount shown before tapping your card.



London has already worked that one out - Oyster. Or general prepaid debit cards. The railway could even do a deal with one of the banks to create one specifically for them, though there are plenty out there.

Could be an error but this shop has had numerous complaints of them doing it, one of them shops that also sell vapes and out of date sandwiches.

 

[DelayRepay]

Could be an error but this shop has had numerous complaints of them doing it, one of them shops that also sell vapes and out of date sandwiches.

Sounds like rather than choosing between cash or card to pay, the best thing would be to choose a different shop!

I remember years ago a shopkeeper near me was arrested for deliberately giving out fake £1 coins in change. And having a cannabis farm in the basement but that's even more off topic!

 

[duncanp]

Interesting article here about the trend called "cash stuffing".

Could the 'cash stuffing' budgeting trend help you save money?

Dan Whittaker, at CashLady.com explains the 'cash stuffing' trend, which sees Millennials physically withdrawing money from the bank to allocate cash into categories.

www.dailymail.co.uk

What is 'cash stuffing'? Could the budgeting trend beloved of Millennials which sees fans using physical money instead of cards and apps really help you save?​

• A money-saving trend called 'cash stuffing' is taking TikTok by storm
• Finance expert Dan Whittaker explained how it works and the downsides
• It see's people withdrawing money from the bank to allocate cash into folders
• The 'cash stuffing' hashtag has generated over 530 million views to date

With the cost of living crisis impacting the majority of the UK, Gen-Z and Millennials are looking for new ways to save.

And the 'cash stuffing' trend, which sees fans physically withdrawing money from the bank to allocate cash into categories is becoming increasingly popular.

The 'cash stuffing' hashtag on TikTok has generated over 530 million views to date with savers from around the world following the growing trend.

Personal finance expert Dan Whittaker, at CashLady.com, has explained how the budgeting system works, as well as its potential downsides.

What is 'cash stuffing'?

Cash stuffing is a method of budgeting, whereby people physically withdraw money from their bank account and organise it in a folder system.

Using a personalised folder containing several labelled envelopes, savvy savers divide their monthly outgoings into categories, label each envelope with a category, then select a budget for each category and put the allocated amount of cash into the envelope.

For example, if your monthly take-home pay was £1,000, you would make your essential payments as normal via direct debits, such as rent, mortgage and bills.

Then, you split the remaining money into several categories within your folder.

This could be for things like the weekly shop, birthday funds, socialising, holiday savings or pocket money for kids.

Each category and its envelope would contain the exact amount allocated in your budget. The technique is also sometimes referred to as the 'cash envelope system'.'

At the end of the month, you can see clearly how much money you have spent in each area and track it on a spreadsheet.

You can then readjust your budgets for the next month to stay on track.

If you're lucky enough to have funds left over, these should be moved into a separate folder which acts as bonus savings for whatever your ultimate saving goal is.

Why does it work for some people?

This method of saving can be a great way to keep you motivated to achieve your savings goals.

Breaking down larger savings goals into smaller monthly targets makes the task of saving less overwhelming, and being able to literally see the money saved each month can lead to a greater sense of achievement.

Also, seeing your money physically dwindle can make you more aware of the current state of your finances.

Using apps or even online banking can sometimes feel as though you aren't actually spending money as there is no physical cash exchanged.

With cash stuffing, you have a visual representation of your earnings and outgoings which can lead to a greater sense of awareness of your finances; when you see what you're spending, you think more about what you're spending.

This is perhaps why the method is particularly popular amongst young people, who have been brought up using online banking and are seeking a new way to view and manage their money.

Another bonus with this method is that you're avoiding the risks that can come with credit cards or overdraft fees.

Avoiding credit cards altogether stops those prone to overspending from racking up debts, as once your monthly budget is gone, it's gone.

What are the downsides?

However, there are some downsides to bear in mind - notably, security.

When your money is locked away in your bank, it is protected by the bank's security systems and the Financial Services Compensation Scheme.

However, with your money living outside of your bank in cash form, it may be more vulnerable to theft, loss or damage (for instance from fire).

If this were to happen then you would essentially have no recourse to recover that money.

If you are interested in this technique, investing in a safe or something similar would be advisable.

You also aren't earning any interest on your money while it is not deposited in a bank, building society or other savings scheme.

 

[Dai Corner]

Interesting article here about the trend called "cash stuffing".

Could the 'cash stuffing' budgeting trend help you save money?

Dan Whittaker, at CashLady.com explains the 'cash stuffing' trend, which sees Millennials physically withdrawing money from the bank to allocate cash into categories.

www.dailymail.co.uk

Exactly what my grandmother did in the 1960s, except she had a drawerful of purses, and equivalent to the sub-account facility Monzo Bank offers and a previous poster described.

 

[Bletchleyite]

Exactly what my grandmother did in the 1960s, except she had a drawerful of purses, and equivalent to the sub-account facility Monzo Bank offers and a previous poster described.

Monzo of course makes this easier as you don't need to carry a stack of separate envelopes in your wallet.

 

[Phil56]

I still use cash but only for a few things. Barbers is one, often cash only and small corner shops, never really trust them. I know someone who was charged £25 for a packet of crisps for using there card, shop scamming people it seems.

Maybe innocent mistakes. I've used a few card machines, and some are weird in that you have to type in 250 for £2.50 as they didn't accept the decimal point, whilst others would accept you entering 2 point 50 and would take 250.00 if you didn't type the decimal point. So, it could be staff working in different places with different types of card machine and not remembering the difference?

 

[satisnek]

Yes apparently so. Sam Smith's pubs are a complete anachronism run by an imbecile. I won't go near them.

At the end of the day he's no different to the imbecile who runs the Chilled Pubs chain in Derbyshire/Staffordshire which has stopped accepting cash. Not to mention the imbeciles up and down the country who now close their pubs at 10pm when it used to be 11 or later. The world is full of them.

 

[Bikeman78]

There are still many Chinese takeaways and barber shops which do cash only.

There are loads of takeaways in Carlisle, Workington, Whitehaven and Cockermouth that only accept cash. I'd imagine the same applies to other towns in the area.