When was the last time you paid with a cheque (or even held a cheque)? When was the last time you used an ATM, or paid in cash? Did you have a piggy bank when you were a kid? Do your kids?
A few decades ago, it wasn’t uncommon to use cheques as a method of payment. Over time this practice died down, new services were developed such as online banking, debit and credit cards, BPAY, PayPal and PayID.
Last year, the Reserve Bank asked 1,000 Australians to record every payment they made over one week. Around 0.1% of payments were made with a cheque (in 1980 it was around 85%)*. In 2007, 69% of payments were made in cash, by 2022 it dropped to 13%*. By 2030, cheques will be phased out in Australia completely.
The shift towards a cashless society has been happening steadily. The latest trend is now being smart phone payments. You can now leave the house with just your keys and phone; no wallet required. The concept of a cashless society is a source of great debate for both for and against. There are clear elements to consider for both sides.
Some pros for going cashless:
- Cashless payments are generally more convenient than cash.
- Time spent managing cash for business and consumers will reduce; business owners will also not have to worry about storing cash on their premises.
- Physical money can be unhygienic; during COVID, digital was the preferred payment method.
- There is a lot of security and protection around the digital that isn’t available for the physical; you lose your wallet, you lose your cash, but you can cancel cards almost instantly.
- It can potentially lower crime rates and reduce things like money laundering and tax evasion.
- People working ‘cash in hand’ could now be eligible for employee benefits (this could also reduce the ability for ‘dodgy’ employers to avoid paying super and other leave entitlements).
Some cons for going cashless:
- Physical cash isn’t limited to the availability of technology; if your banking services goes down, you don’t have access to your money.
- It’s been a useful way of budgeting for some time; the way we respond to paying with cash compared to paying with card is different, and can help to minimise unnecessary spending.
- It can be a safe way to prepare to leave a volatile situation (such as a violent relationship) without leaving a digital record.
- Increase in online scam activity as scammers attempt to drain bank accounts.
- Younger Australians, particularly children, may never experience pocket money and piggy banks; how does the way we educate our children about money change without physical representation?
- Older Australians may struggle to understand the technology.
- Currently no way to avoid payment surcharges when paying with EFTPOS or credit card.
A fully cashless society may be inevitable, but it won’t completely come about for another 10-20 years. However, the shift has already started. Banks have been closing branches, and others will no longer provide cash or the ability to make cash payments.
Should you prepare to go fully cashless? It’s a long way off, but there are a lot of things to consider before that happens, most importantly, understanding how to protect yourself in the online space.
