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Penny coins could be scrapped amid rise in contactless payments

Penny coins could be scrapped amid rise in contactless payments

It has raised the prospect of scrapping the denominations in documents released as part of the spring statement.

The Treasury's Cash and Digital Payments in the New Economy consultation questioned whether the current mix of eight coins and four banknotes meets modern needs, and if not "how should it change?"

Around six in 10 1p and 2p coins are believed to be used only once before they are put into savings jars - and around 8 per cent are thrown away.

In the document the Treasury published on Tuesday there were some fascinating nuggets of information about how cash has fallen out of fashion in 21st century Britain, especially with the younger generation, so-called "millennials". Apparently people really do throw them away, with the the document claiming a twelfth of all copper coins.

As such, the government said it needs to balance the ability to pay by cash while cracking down on the minority who use cash to evade tax and launder money.

The cost of industry processing and distributing low-denomination coins is the same as for high-denomination coins, "making the cost high relative to face value and utility", it noted.

Studies suggest that most people don't use 1p and 2p coins. "There is a significant overseas demand for £50 notes, with the notes used for some transactions, but mainly held as a store of value alongside other currencies such as the dollar and euro". The report continues that there is also a "perception among some that £50 notes are used for money laundering, hidden economy activity and tax evasion".




"When it costs more to produce and distribute a coin than the coin itself is worth, governments tend to decide it's a spent force - and we're rapidly heading in that direction for coppers", Sarah Coles at Hargreaves Lansdown told the Guardian.

If the 1p and 2p coin are consigned to history they will follow the halfpenny coin, which was scrapped in 1984.

Aside from taking them to the bank to swap for proper cash, when was the last time you actually paid for something with some copper coins?

"Technology has revolutionized the way people shop, sell, and save, and people are increasingly moving away from using cash".

A 2p coin weighs 3.56g - twice as much as a penny.

"To meet demand created by such losses from circulation, in previous years the government and the Royal Mint have needed to produce and issue over 500 million 1p and 2p coins each year to replace those falling out of circulation", the Treasury said.