Australians wary of the fast-approaching reality of life without cash have been told to literally put their money where their mouths are.
Predictions say Australia will become a “technically cashless” society in as little as two years, as people rapidly phase out the bills in their pocket for a far more convenient “tap and go” lifestyle.
It comes with a lot of benefits – there’s no more fumbling with shrapnel at a packed bar or festival, and losing your wallet is far from the crisis it used to be.
It is our love affair with convenience that has driven the rapid change. That, and the emergence of smartphones and equally cutting-edge developments in banking technology all played a role in the seismic shift away from cash about 15 years ago.
But nobody thought it’d all happen this fast.
“We’ve never had a cashless society, so we don’t know what it looks like,” finance specialist Sarah Wells told news.com.au, explaining how quickly attitudes have changed over the past decade or so.
“All the changes we have seen have put us in a situation where we no longer need cash.”
Ms Wells previously stated that by 2026 Australia would effectively be cashless.
Australia has “lost” a billion dollars worth of physical cash from what used to be in circulation.
The money still exists, but the trends consumers have set have almost completely eradicated the need for notes and coins.
“There hasn’t been a requirement for it to come back out into circulation. Because people aren’t popping down and taking money out of the ATM or going to banks anymore,” Ms Wells said, noting that only 13 per cent of transactions in Australia are still done with cash.
But Australia’s tap-and-go future was put to the test last month when the Optus completely shut down for over eight hours.
Several businesses were put on pause and those with urgent purchases to make were forced to trudge back to the ATM.
Convenient as it is, the cashless system is inherently tied to fallible communications networks, which introduces the possibility of nationwide chaos should a network go under for even a few hours.
Ms Wells says the the Optus wake-up call might have roused a few people into carrying more cash than they usually do.
“There was a caller that rang up and said he was at the supermarket and out of eight people he saw go in and buy groceries, six of them were using cash,” Ms Wells said, referencing a radio program she spoke on earlier.
One of the risks of a cashless society lies in the supply of cash available in the event of a major financial crisis.
After years of slowly eradicating physical notes from the system, an event where thousands of people attempt to withdraw their savings would be a disaster.
“The challenges we have with moving towards a more cashless society, or what I call a less cash-dependent society, is if we’ve lost a billion dollars, that means that there’s a billion dollars less going into ATMs for us to use,” Ms Wells said.
“So if we start to have more outages, or we have more challenges, people can go to an ATM, but the cash might not be there.”
Ms Wells told those skeptical of a cashless system to vote with their feet, because at the end of the day, consumers drive the market.
To balance out the scales, Aussies would need to revert to withdrawing and using cash over a long period to reintroduce the demand.
“We are in a situation that we have created ourselves,” she said.
“All we have to do is change our behaviour. If every Australian went out and withdrew $100 a week, instead of buying stuff. You know what? We’d end up with more cash in the system, kids, will know about cash, stocks will start taking cash.
“If we don’t want to live like that, we have to inconvenience ourselves a little bit and change the supply and demand.”
The trust in the digital systems to remain robust is what has pushed the cashless revolution forward. Attitudes have shifted over the years, with many Aussies now putting all their faith into apps to keep them safe and secure.
Companies like Uber and AirBnB have built empires capitalising on convenience, backed up with tight security systems. They have now become the norm, even though the prospect of their business model would have made most people baulk a few decades ago.
“If you told me when I was 28 that in 2023 I would be getting into a complete stranger’s car and trust an app, or go and stay in a complete stranger’s house. I would have said you were crazy,” Ms Wells said, adding that common concerns about privacy were a moot point for anyone who simultaneously owns a smartphone and hates the idea of a cashless society.
‘Some kids have never seen money’
The gamification of money has fundamentally changed how we value and spend our hard-earned dollars. The ease of tapping our phones has opened up more opportunities throughout the day to spend fractional amounts here and there, whether it be a juice machine, Lime bike, Uber or a coffee stand.
Not long ago you would still have the feeling of parting with something physical every time you splurged. Now, hundreds of dollars can disappear in a heartbeat if you’re not careful.
“We started off with EFTPOS, but it used to be a backup,” Ms Wells said. “Cash was our primary habit, because we habitually went and got cash.”
Ms Wells argues there are “two small sectors” of society that can “really value from seeing cash”.
“There are some kids that have never seen money,” she said.
“It’s gamified, it’s digits on a screen. So they don’t understand the value or the responsibility to it.
“The second group are those that are either experiencing elder abuse or domestic violence. Because cash is not traceable, everything else has a digital footprint.”
But the tide keeps rolling in. Over the past six years, 1600 bank branches have closed down with the vast majority of those in regional areas.
As well as those who live rurally, statistics show older people, vulnerable people and those on lower incomes still prefer to use cash.
This has prompted fears people from those groups could be left behind during Australia’s rapid transition to a cash-free economy.
There should be a big drive to reassure people they have nothing to worry about in ditching cash, RMIT University finance expert Dr Angel Zhong says.
“In addition to reassuring, we can help people embrace innovation to enjoy the conveniences of technology,” she said.
Adding to the concerns of regional businesses is the fact that patchy internet access makes them more reliable than most on the convenience of cash.
“People in regional areas constantly have challenges around internet access so using cash is often an easier option, making the local bank branch and cash services important to those in country towns,” general manager of Junee Licorice and Chocolate Factory, Rhiannon Druce, said.
The pressure is now on governments and internet providers to ensure people in regional and remote areas can continue to access banking services in what’s soon to be an almost entirely digital world.
“Innovation and technology must go hand-in-hand with infrastructure investments,” Dr Zhong said.
“The shift towards a cashless society in Australia isn’t just a possibility, it’s already well under way.”