CMSpi’s Polymer Planning Summit, which brought together many of the UK’s biggest retailers (including Tesco, Sainsbury’s, Marks and Spencer, John Lewis, Virgin Trains, Specsavers, Subway and Travelodge), highlighted that the new living wage, rising interest rates and the transition to polymer banknotes will all force up the cost of cash.
“Retailers are being hit with a double-whammy: falling consumer usage of cash and rising costs of accepting, holding and transporting it,” says Brendan Doyle, CEO of CMSpi. “The Bank of England has indicated that interest rates of 2.5% to 3% will likely become the ‘new normal’, so with cash taking on average 4.5 days to get from a retailer’s till to their bank, the cost of holding cash – in tills, safes and in transit – increases significantly. Add to this increased employee costs due to the living wage and we calculate this will result in the cost of cash going up from around 0.20% to 0.30% (of transaction value) for most major retailers.”
These extra costs will only add to the headache retailers are about to face to ensure they become ‘polymer banknote ready’, with retailers forced to traverse the staggered introduction of the £5, £10 and £20 polymer notes, the new £1 coin and the Scottish notes between autumn 2016 and 2020.