How Much Longer Will Australia Still Use Cash?

Going cashless just makes sense/cents.

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Cash! We love making it rain. We love how colourful it is in Australia. And if we ever had enough, we’d probably enjoy diving into a big pool of it, Scrooge McDuck style. (Coins would be too painful.)

But with the advent of tap-and-go technology, how much longer are we really going to use it?

Back in 2017, Professor Richard Holden of UNSW predicted Australia could phase out cash usage as early as 2020. Well, that’s not looking too likely from where we’re standing today. Still, we have to wonder: Is a cashless society inevitable?

Let’s explain the reasons we’re still using cash in 2019, and what will likely bring its usage to an end (and when)!

Who even uses cash these days?

According to the Reserve Bank of Australia (RBA), cash payments have declined a lot over the past decade. In 2010, more than 60 per cent of consumer payments were made in cash. By 2016, that had fallen to 37 per cent. The biggest shift, obviously, is among young people. Back in 2007, the percentage of payments made in cash by 18 to 29 year-olds sat at 67 per cent. In 2016, that number dropped to 31 per cent, while 58 per cent were done via card. Even for the 65+ demo, cash payments are falling.

So, who’s still using it? The RBA found that the majority who spend their dollar-dollar bills only did so when their merchant didn’t accept alternative payments. Others used cash out of habit, to avoid card surcharges or to help them budget better. But fewer and fewer are doing so every year.

What’s caused the decline?

Firstly, think of all the online retailers that have either emerged in the past few years, or cemented their place as your primary spending venue. More often than not, younger demographics seem to prefer online shopping than physical window shopping. Plus, given online vendors’ preference for credit cards, and changes in technologies—like the rise of neobanks (which are digital-only banks), digital wallets (think Apple Pay and Android Pay), cryptocurrencies, online money transfer companies (like PayPal) and lenders (like AfterPay)—the need for cash is falling away.

What would we really lose if we got rid of cash?

Some research suggests that those who would be most affected by the end of cash would be those in lower socio-economic households. They have been found to be less likely to have a banking relationship, usually because of bank fees (exacerbated by low or unsteady income and deposits, or instances where they’ve had insufficient funds for a withdrawal). And, as wild as it may seem, there is still a percentage of people out there who don’t use the internet (think of the elderly, and those in rural communities; oh, and those who are fearful of identity theft and want to remain off the grid). As of 2018, there are still 2.6 million Australians who don’t use the internet.

However, it won’t always be this way. Some of the enhancements of the fourth industrial revolution—a fancy way of saying: the age we’re living through—have tried to solve those issues. Neobanks, for instance, do away with bank branches and bank fees, relying on advanced, customer-led technologies instead, in an attempt to make the transition from cash to online currency easier.

So, when will cash be a thing of the past?

For more than five million people in the United Kingdom, it basically is already. According to the BBC, cards are taking precedence, with cash transactions declining by 16 per cent in 2018. Meanwhile, our affordable furniture-designing mates in Sweden have almost completely transitioned to a cashless society (where even those who sell the equivalent of The Big Issue get paid via a QR code).

As for Australia, well, we’re already the sixth highest users of electronic payments in the world. In December last year, Professor Holden adjusted his prediction, suggesting Australia could become cash-free within the next three years. And research from market analyst East & Partners backs it up, saying cash payments could fall below two per cent by 2022.

Whether it’s in the near future or still further down the track, it seems cash won’t be around forever. We just need to ensure technology keeps up with changing consumer habits, so no one’s left behind.

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Header Image: iStock.com/enjoynz