Disruptive Trends: Say Goodbye To Cash
Most women hate heavy purses full of coins. With the trend to non-cash purchases, soon cash (and coin purses) could be a thing of a very archaic past.
Where are we now?
Australia is one of the world leaders when it comes to the move towards a cashless society. Trends reported by the Reserve Bank of Australia show an increasing shift away from cash towards online transactions.
In 2014/2015 the number and value of ATM withdrawals dropped by 5% and 2% respectively, a trend that has been occurring since 2012. (1)
People now don’t pay their bills with cash. “It accounted for 47 per cent of the number and 18 per cent of the value of all payments in 2013, down from 62 per cent and 29 per cent respectively in 2010.” (2) However, cash is still the main method used for low value (less than $20) purchase transactions.
Debit cards are the standout winners of non-cash payment methods, with an average 13.7% annual growth since 2009/10. Debit card purchases now make up 42.5% of all non-cash purchases. (3)
Cheques are (happily) a dying breed, only making up 1.6% of all non-cash purchases and declining at a rate of 13.3% per year.
Australia is not the only early adopter towards becoming cashless. Sweden is another leader in the shift to the cashless economy, with economists predicting that the entire Swedish economy could be cashless by 2030 (4)
Implications
We are already seeing some of the implications towards a cashless society hitting home in Australia.
Reduced ATM demand has seen banks quietly removing ATMS by the thousands across Australia. Five years ago most local bank branches would have three or four ATMs outside their branch. Now, most branches have just the one ATM.
ATMs in less visited locations such as the Post Office or corner store are removed and either not replaced or replaced by an independent machine on a fee for service model.
Traditional bank branches are also changing. With less cash and cheques coming over the counter, there is less need for tellers. When we move fully cashless, most branches will either close or move to minimal sized locations or central hubs.
Businesses are not immune from these impacts. Consumers are increasingly demanding alternate non-cash payment methods from businesses – with increased requests for BPay and credit options.
Not surprisingly, fraud is also on the increase with the shift to a cashless economy.
“Total losses relating to fraudulent cheque and debit, credit and charge card transactions (where the card was issued and/or acquired in Australia) increased by 29 per cent to $450 million in 2014, according to data collected by the Australian Payments Clearing Association (APCA). The fraud rate (the value of fraudulent transactions as a share of overall transactions) on Australian-issued cards increased from $0.47 per $1,000 in 2013 to $0.59 per $1,000 in 2014.” (1)
With the dramatic rise in Australians being hacked and having their personal data stolen, these rates will only increase unless strong action is taken by businesses to ramp up security of their systems, and by individuals to minimise personal risks. (5)
Other implications include the psychological impacts of the shift to paying with plastic. People buy differently when they have cash compared to cards. With cash people think more before they buy. When they purchase on plastic, they focus on the perceived benefits rather than the costs. Moving cashless means we will see increasing credit card debt with all the subsequent flow-on effects in terms of bankruptcies and financial problems. (6)
So, collect some coins and banknotes and pop them in the safe for your great-grandchildren. For them, cash may well be an antique novelty in much the same way as we view buggy whips and telegrams.
money
1) http://www.rba.gov.au/publications/annual-reports/psb/2015/retail-payments-developments.html
2) http://www.rba.gov.au/publications/annual-reports/psb/2014/trends-in-ret-pay.html
3) http://www.rba.gov.au/publications/annual-reports/psb/2015/tables.html#table-1
4) https://magazine.good.is/articles/sweden-becoming-first-cashless-modern-society
6) https://www.nerdwallet.com/blog/credit-cards/credit-cards-make-you-spend-more/