New 5p and 10p coins are scheduled to save the Treasury £10m a year, but could end up costing industry an estimated £100m.
The government has announced that, from April 2011, 5p and 10p coins will cease to be made from a copper and nickel alloy called cupronickel and switch instead to nickel coated steel. The move is prompted by rising copper prices and was forecast in the Chancellor’s October Spending Review to save the Treasury £10m a year as old coins are phased out over a 10-15 year period.
But industry spokesmen are concerned that Whitehall has failed to allow sufficient time to adjust coin scanners and have called for the introduction of the coins to be delayed.
There are currently 3774m 5p coins and 165m 10p coins in circulation.
Cost to industry and to you
The British Parking Association has put the cost at £20m. A spokesman said, ‘We do not want to see parking tariffs increase simply to pay for the cost of the introduction of these new coins. We are also concerned that motorists are not confused by having coins which look identical but do not always work in parking meters.’
Jonathan Hilder of the Automatic Vending Machine Association says ‘The change will cost the vending industry £43.5m with no benefit to them. A move in coinage introduction to January 2012 would very helpful and cut the industry cost by over £16m.’
Alternative ways to pay
Coins are still used extensively for everyday payments, but the latest initiative might accelerate the trend towards alternative methods of payment. The Payments Council reports that over half of transactions currently involve cash, although 80% of these are for under £10. New ‘wave and pay’ technology, also called ‘contactless payment’, presents an increasingly viable alternative for these low-value exchanges. For larger transactions debit cards are already gaining in popularity.
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