Yahoo Finance Cash makes huge comeback on Australia's doorstep: 'Growing realisation cashless can't happen'
Cash circulating in New Zealand has nearly doubled in the last 10 years.
Cash circulation in New Zealand has nearly doubled in the last 10 years as Australia's Tasman neighbour appears to be bucking the cashless revolution ever so slightly. While card payments make up an overwhelming majority of purchases, the Reserve Bank of New Zealand (RBNZ) has revealed a sizeable portion of Kiwis are still devoted to cash.
There's about $9 billion in New Zealand cash floating around the community, and Cash Welcome founder Jason Bryce said it's clear physical money is still very much needed in the age of digital payments. He told Yahoo Finance he wouldn't be surprised if Australia soon follows suit.
"I think in 2024 we're seeing a bit of a move back towards cash and a bit of a growing belief that the move to being cashless is garbage," he said.
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"All these predictions we're about to imminently go cashless is garbage, and there's a growing realisation that it just can't happen."
He pointed to NAB's recent internet banking outage as a reason why Aussies could lose confidence in digital systems and also highlighted recent research that showed you save more when you deal mainly in cash.
The cash advocate said Australians are "waking up" to the idea that "cash doesn't crash".
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Susan Guthrie from the Reserve Bank of New Zealand explained to RNZ that inflation is a big reason why more cash is being held by Kiwis across the country.
"Our latest stats show that those who depend on it, [who] withdraw cash a lot during the week and use it for spending, is actually growing a little, and at the other extreme, those who don't use cash much are using it less and less," she said.
"It's almost like a bit of a twist in the market - some people really need it, some people don't think they do, but everybody says they like the option of it so we're committed to making it available."
Calls to break down barriers to cash access for Australians
Bryce said the Australian banking system needs to commit more to keeping cash in circulation rather than close down regional branches and ATMs.
He said if there were more services available, more people would carry cash. The advocate firmly threw his support behind the bill introduced by Andrew Gee and Bob Katter that would force businesses to carry cash or face a hefty fine.
But recent data revealed Aussies are more dedicated to using digital payments than ever.
The Australian Banking Association (ABA) found mobile wallet payments have overtaken ATM cash withdrawals for the first time. In 2023, there were $126 billion in digital payments, compared to $105 billion in ATM withdrawals.
Mobile wallet transactions have increased 18-fold since 2019 and, last year alone, they jumped 35 per cent.
New Zealand could bring in a digital currency
While New Zealand's central bank said it is "committed" to keeping cash circulating, the country has highlighted the possibility of introducing a government-backed digital currency by the end of the decade.
A digital dollar would operate alongside physical notes and coins and would act as another form of money for Kiwis to deal in goods and services.
The RBNZ said the digital currency could improve efficiency, innovation and competition in the financial system.
The Bank's head of money and cash, Ian Woolford, explained how it could be a game-changer for the country.
"New Zealand's money must innovate to stay relevant and useful and ensure our monetary sovereignty," he said. "You would likely need a digital wallet, payment card or phone app to access your digital cash. You wouldn't need a commercial bank account to use it."
It would allow Kiwis to send money to each other instantly, which, at the moment, can't be done unless the two parties are with the same bank.
The Reserve Bank said you could transfer money to another person even if there's a power outage or the internet is down, which have been big reasons for cash advocates in Australia to resist the cashless revolution.
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