HM Treasury is contemplating removing one penny and two pence coins from circulation, according to an Evening Standard report.
Sources said that The Treasury made an uncommon decision to place no new coin orders this year, while officials are drawing up proposals for the future of the two lowest denominations of British sterling.
The unconfirmed rumours come at a time of declining cash-based payments in favour of digital rails and online purchases.
Data released by UK Finance today shows that almost four out of ten payments in
the UK last year were made using contactless methods, with 85% of people now
using this payment method “on a regular basis”.
However, UK Finance’s managing director of payments, innovation and resilience Jana Mackintosh said “this doesn’t mean we are on our way to becoming a cashless society”.
Cash is still the second most frequently used method of payment in the UK, although we are using it less and more people are leading largely cashless lives,” she added
Nonetheless, at 12% of total annual payments compared to 61% for card payments, cash is definitely not King these days.
Just ten years ago, cash made up half of all annual payments, but pandemic-era health concerns helped speed up cash’s decline in popularity, said UK Finance.
UK Finance expects cash payments to decline to just 6% of total payments by 2033.
If the UK eventually decides to scrap the 1p and 2p coins, it will join Australia which removed the one cent and two cent coins from circulation in 1992.
A statement for a Treasury spokesperson read: “The Royal Mint produces coins according to expected demand, existing buffer stocks, and orders placed by industry.
“We are confident there are enough coins in the system, with estimates of approximately 27 billion in circulation in the UK. The Treasury has no current plans to change the mix of UK coins.”