Cash likely will always be with us, despite the willingness of the marketplace to embrace alternative methods of payment for goods and services, says a Retail Council of Canada (RCC) executive.

"There is certainly a chunk of the population that appreciates the anonymity of cash," says Peter Woolford, RCC's vice-president of policy development and research.

"If you want to buy your spouse a present and you don't want him or her to know, cash is one way of doing it," Woolford adds. "There is no trail."

The Toronto-based RCC is one of several retail and business organizations that Canada's central bank - the Bank of Canada - maintains partnerships with to keep abreast of consumer and retailer preferences on payment methods.

Myriad high-tech payment options have emerged worldwide, threatening to make coins and paper currency go the way of the shinplaster. These include credit cards, debit cards and "smart cards" (embedded with a computer chip that contains electronic cash).

The federal government is now seeking the public's views on allowing financial institutions to electronically process cheque images instead of physically transporting them throughout Canada as part of the country's cheque-clearing process.

The consultation is part of a review of financial institutions legislation that Finance Canada intends to complete by October 2006. Sunset clauses in the Bank Act, Insurance Companies Act, Trust and Loan Companies Act and Cooperative Credit Associations Act provide for automatic reviews of the legislation every five years.

Even the writing of cheques is becoming a quaint carry-over from a former era, much like the quill pen and inkwell once used to fill them out, as alternative payment methods gain universal acceptance.

On the face of it, though, currency and coins would seem to be first on the chopping block.

There is no law in Canada that requires retailers to accept cash. Payment is by whatever method agreed to by both parties. The law on legal tender requires only that creditors accept Canadian currency or coins in payment of a debt, if the debtor so chooses.

The Currency Act sets the following limits on what constitutes legal tender when coins are proferred by the customer:

* $40, if the denomination is $2 or higher but does not exceed $10.

* $25 if the denomination is $1.

* $10 if the denomination is 10 cents or greater but less than one dollar.

* $5 if the denomination is five cents.

* 25 cents if the denomination is one cent.

In recent years, some creditors have begun resisting payment by cash. Utilities are among the most common offenders. They do everything they can to make the process inconvenient or risky, such as suggesting that clients send their money through the mail - something that no responsible business would ask.

Such obduracy represents a law enforcement issue, and such complaints can be seen as trivial. Trivial offences usually do not attract a speedy law enforcement response, given limited policing budgets and the abundance of more serious crimes that strain these finite resources.

Cash-paying debtors are left with one viable choice: Identify the regulatory agency responsible for the utility in question; then go to that agency with their concerns. Public policy dictates that everyone must have access to essential services, and this ought to include those who need or prefer to pay by cash.

Not everyone agrees that conventional money will always be around.

"The demand for central bank money will not only drastically fall, but also probably disappear altogether, over a foreseeable horizon," British academics David Cronin and Kevin Dowd predict in a paper, Does Monetary Policy Have a Future?, published by the Washington, D.C.-based Cato Institute.

Cronin and Dowd attribute this to new payments media. "These new payment instruments are specifically designed for undertaking small and medium-sized transactions and, as such, are obvious substitutes for conventional cash," their paper says.

"Electronic payments media also tend to be cheaper for banks to handle than conventional currency and paper-based payment instruments. Persuading customers to switch away from paper to electronic-based payment media would substantially reduce those institutions' operational and security costs."

However, the Retail Council's Woolford told Business Edge that retailers are finding some new payment methods excessively costly to operate. In addition, he said, retailers are becoming concerned about the quality of service they are given.

Woolford says card-processing companies are charging retailers as much for stored-value cards like VISA Gift Card and shopping centre owner Cadillac Fairview's shop!

card as they would for regular credit cards.

Merchant discount fees typically range from 1.7 to two per cent.

"It's quite expensive," Woolford says. "It's treated like a credit card transaction. But there's no credit risk. The money has already been received from the holder of the card in advance."

Woolford says retailers are finding it increasingly difficult to resolve customer complaints when the customer disputes a charge. Delays are becoming lengthier and card association requirements are becoming onerous, he says.

"The level of service ... is not as good as it used to be."

In a submission to Finance Canada, Woolford recommends that the government look at ways to strengthen the effectiveness of payments system legislation.

This review, Woolford writes, should include whether the role of the Canadian Payments Association should continue to be limited to the clearing and settlement of payments "or whether it should have responsibility for a wider spectrum of payment systems and activities."

Woolford says Canada's retailers will continue to adapt to whatever its clientele dictates. "Retailers are customer-driven," he tells Business Edge. "If their customer wants to pay with a certain method of payment, then by gum, the retailer will take it. If a lot of customers show up with beans, we'll find a way of taking beans."

(Brock Ketcham is an Edmonton-based writer who specializes in consumer and public policy issues. He can be reached at brock@businessedge.ca)