Cash – An Expensive Commodity
How much does it cost to pay? That might appear to be an odd question, but it is a seldom acknowledged hidden attribute of the market economy. Paying costs. If one only imagines the contingencies required to handle the coin money which filters through any system of minor payments, such as a road toll booth, a system of parking meters or a public transport system, it becomes clear that dealing in such currency requires some not inconsiderable expenditure on the part of the service provider.
The key here of course is cash, that anonymous key to the monetary house. Some have pointed out that the age of using cash as a medium is gradually drawing to a close, and the establishment is beginning to see the benefits of expediting its demise. This includes the government, banks, financial markets and big corporations. For an example, we need only consider the recent charges introduced by BT.
According to the government watchdog Ofcom, in recent years BT have had a residential market presence of 70-80%, with the latter figure roughly representing the number of residential lines. This totals roughly 20 million landlines, which using the traditional quarterly bill paying system makes 80 million payments a year. So how much does it cost BT to collect these charges? Well, consider the options.
- An old-fashioned method such as paying your bills at the Post Office should involve little detriment, the money being transferred electronically into BT’s bank accounts, with presumably some small handling fee for the Post Office.
- A cheque made payable to the company, which given the scale of their operation should also be a simple matter for the giant to deal with.
- Online credit card transaction, which would incur charges from the credit card companies, though I’ll admit I don’t know if BT passes these on to its customers.
- Electronic Direct Debit payments direct from customers’ bank accounts.
BT’s preferred method is clear, and as their website points out:
Many of our customers now pay by Direct Debit which is an ideal option if you find it difficult to get out or worry that you will forget to pay your bill on time.
The arguments are dressed up and sugar coated to make the idea of giving BT direct access to your bank account seem to be a rather agreeable proposition. The icing on the cake is that it costs customers less to pay via this method. BT have introduced a scandalous ‘payment processing fee’ amounting to £4.50 (plus VAT) per transaction, paying via cheque or cash.
Now one can understand the complexities of dealing with payment methods such as the cheque. Assuming BT have no automated procedures for dealing with cheques, manually inputting the figures, such as dates, sums, account numbers etc., requiring an hour’s labour for 100 payments, one can see how a wage of £500 per hour is justifiable. But to charge such extraordinary fees for cash payments that are dealt with by another body, where is the justice in that? The levy represents around a 10% increase on the average customer’s quarterly bill. Add to that the fines for late payment (which are avoided with Direct Debit by having your bank balance overdrawn instead), and it becomes clear how BT are dictating the payment methods of their victims customers.
This isn’t the first example of prejudice against traditional payment methods, nor is it a precedent for cash payments being made financially unsound. But it is surely an example of the way in which the demise of anonymous paper money is slowly being exacerbated by that interlinked establishment of government and big business.