Times: The £ 8 purchase on plastic that finally put paid to cash

The Times December 30, 2004

The £8 purchase on plastic that finally put paid to cash By Mark Henderson, Science Correspondent

Chart:

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Caption: How we will pay

AN ECONOMIC era came quietly to a close at the checkout of a West London supermarket at 10.38am yesterday, as plastic finally supplanted cash as Britain¹s most popular method of payment.

When Helen Carroll used her Maestro card to pay at the West Cromwell Road branch of Tesco, the amount that Britain spends on credit and debit cards overtook cash for the first time.

British shoppers are predicted to put a total of £269 billion on plastic cards during 2004, compared with £268 billion in cash payments, according to the Association for Payment Clearing Services.

The association calculated that a transaction made at 10.38am yesterday would tip the balance, and staged Ms Carroll¹s shopping trip to mark the occasion.

Ms Carroll, a primary school teacher from Gosport, Hampshire, was chosen because she was born in June 1966, the month in which Britain¹s first credit card ? Barclays Bank¹s Barclaycard ? was introduced.

Her historic basket of groceries, which cost £8.34, was made up of a loaf of bread, milk, toothpaste, fruit pastilles and Fairy washing powder tablets.

Jemma Smith, of the association, said that improvements in technology and security had allowed plastic to overtake cash as the primary means of payment in remarkably quick time.

"When the first plastic cards appeared in Britain in June 1966, only a handful of retailers accepted them and there were very few customers," she said.

"But in less than 40 years, plastic has become our most popular way to pay, due to the added security and flexibility it offers.

"The key driver has been the introduction of debit cards, which now account for two thirds of plastic card transactions and are used by millions of us every single day."

Almost two thirds of all plastic spending ? 64.9 per cent ? is conducted using debit cards, with the remainder taking place on credit cards.

The figures this year for the total plastic card spend includes business cards, but the association predicts that personal cards will overtake cash next year.

Ms Carroll, 38, said that cards were a way of life for her generation. "I pay for most things with my debit card, with occasional purchases on one of my two credit cards. I¹m now at the stage where I find it annoying if I have to pay with cash."

British consumers have 123 million multifunction plastic cards, plus another

23 million cash-only cards and 22 million store cards. More than 90 per cent of adults have at least one plastic card.

Plastic has overtaken cash at the same time as a big change in plastic card technology: the introduction of the chip and PIN security system. Three quarters of all card-holders have at least one chip and pin card.

"Chip and PIN will make payment cards even quicker and easier to use and will help encourage even more people to switch from cash to cards," Ms Smith said.

BANK CARDS

June 29, 1966: Britain¹s first credit card, the Barclaycard, issued by Barclays Bank

1967: first ATM in the world installed by Barclays in Enfield, North London. Early dispensers received hole-punched vouchers for £10 each bought from the bank and used in the dispenser when needed

1969: domestic cheque guarantee scheme is established

1972: NatWest, Midland, Lloyds & RBS together issue the Access credit card

1972: Lloyds Bank is the first to use plastic cards with a magnetic strip

1974: the Consumer Credit Act provides protection for consumers buying goods costing between £30 and £10,000 (£100 and £30,000 in 2005) on their credit card

1977: Barclaycard issues Britain¹s first company card

1985-86: Link ATM network established

1987: debit cards introduced. Barclays were first with the Visa Delta card

1995: debit-card volumes exceed credit-card volumes for the first time in Britain

1996: one billionth ATM transaction processed

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