Business Personal Finance

Saturday 17 March 2018

That's my two cents...

The central bank is seeking to reduce the use of 1c and 2c coins
The central bank is seeking to reduce the use of 1c and 2c coins
Charlie Weston

Charlie Weston

Give up paying in cash, stop using that ATM machine and never mind those little coins.

That is the message that is being pushed out by the authorities.

The Central Bank’s plan to have retailers round your change to the nearest 5c will be rolled out from this Wednesday.

The idea is to reduce the use of 1c and 2c coins.

The rounding will only apply to cash payments with the total amount of any bill being rounded up or down to the nearest 5c mark.

So if you are buying something for 81c or 82c, it will be rounded to 80pc.

If the product you are buying is 83c or 84c, it gets rounded to 85c. If the price of the item ends in 6 or 7 round to 5.

It is important to remember that rounding will be conducted on a voluntary basis, and 1c and 2c coins will remain legal tender. Customers will still be entitled to ask for exact change.

But the likelihood is that the small coins will eventually be withdrawn from circulation.

The move follows a two-month trial scheme in Wexford in 2013.

Some €37m worth of 1c and 2c coins have been issued in Ireland since the introduction of the euro.

The cost of producing small coins exceeds their face value ­— a 1c coin costs 1.65c to produce while a 2c coin costs 1.94c. That is why the Central Bank is anxious to get rid of them.

But the fear is that prices will be raised to accommodate the new rounded amounts, and shoppers will lose out. It is up to us to be vigilant to make sure this doesn’t happen.

Another attempt to discourage the use of cash for small purchases was made in the Budget with the move to put a tax on ATM (automated teller machine) withdrawals.

A cap is being put on the charges banks can impose on retailers for debit card use, to encourage greater acceptance of card use.

From January, the annual stamp duty charge of €5 on debit cards will be replaced with a tax of 12c on each ATM withdrawal. This will be capped at €5 a year. There will be no charge when cards are used for purchases.

But the ATM charge is on top of bank imposed fees for using debit cards.

The limit for using a contactless card — one where you do not have to enter a personal identification number — is being raised from €15 per transaction to €30 from Saturday.

Most banks don’t charge for contactless payments at the moment, but they are likely to from next year.

The attempt from all of this is to ensure cash is no longer king.

But we consumers need to be careful we do not end up paying for the move away from cash.

Sunday Indo Business

Business Newsletter

Read the leading stories from the world of Business.

Also in Business