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Cashless Australia: What you need to know

What you need to know about Australia's cash situation, and why it matters.

Cashless society
Will a cashless move make Nan slipping you a birthday $50 a thing of the past? (Getty) (SteveLuker via Getty Images)

Macquarie Bank (MQG) banning cash transactions from its branches has again raised the prospect of Australia marching toward a cashless society.

So, will pulling out a fiver for your morning coffee soon be a thing of the past? No more cheeky pineapples inside the folds of a birthday card from Nan? The answer Yahoo Finance is hearing: Not likely.

Is this the direction we're headed? Yes. But it will remain a slow march unless the government decides to make a call to phase out bank notes, and there’s been no indication of that.

What you need to know

  • Fewer people are using cash due to the convenience of paying with phones, watches and cards

  • There isn’t a shortage of cash-withdrawal points, with around 20,000 ATMs plus supermarkets to collect from

  • There’s about $100 billion in cash floating around Australia - or 2 billion notes

  • The government has not indicated cash will be taken out of circulation

  • The Big Four banks have all ruled out going cashless

  • Average cash withdrawal has increased from $180 to $290

  • RBA: ATM withdrawals dropped from 77.9 million in December 2008 to 29.7 million in June 2023

  • Finder survey: 13 per cent of Aussies never use cash, 44 per cent use it once a week, and 42 per cent once a month or less

🤔 Why should I care?

Who still uses cash? The older generation who may not be across digital finances - one in five over 65 make up 7 per cent of Aussies who are still high cash users. People with a lower income and those in regional areas also more likely use physical currency. They would need to be considered if there was a cashless move.

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What is cash used for? The RBA says leisure and service purchases like plumbing, hairdressing and babysitting. It’s common to use cash to try to get a discount.

Official data doesn't account for things like buying items on Facebook Marketplace, the “shadow economy” or illegal activity.

There’s been an uptick in young people withdrawing cash as a method to control their finances. Tapping your phone doesn’t physically show your cash dwindle, while “cash stuffing” has yielded results.

How else do people pay and why? Most Australians are more likely to pay with a card, their phone or a smart watch than take the trouble to withdraw from an ATM.

Pros of cashless: Convenience, transparency and safety, reduction in costs for businesses handling cash (insurance, night safe), combats “underground economy” - aka the nefarious bad guys using cash for crime and misdeeds. Or tax avoidance, which pulls as much as $10 billion from the economy.

Cons of cashless: Impacts vulnerable Aussies like the old, socioeconomically disadvantaged, or those living in rural areas (more regional branches are closing, forcing communities to rely on Australia Post for banking). ATM charges.

Who is opposing? There are groups arguing cash should never be phased out. During COVID, this was heightened when places stopped accepting cash in an effort to reduce contact and risk of transmission.

But for right now, if they want cash to be king, no one is stopping them

🗳 What do you think?

⏭️ So what next?

You keep doing you. Businesses and the everyday punter can still access cash at tens of thousands of banks and supermarket checkouts.

Richard Holden, Professor of Economics at UNSW Business School, told Yahoo Finance it would take government intervention to get us there, which would involve the commitment to phasing out notes in different increments.

“You could accelerate the process if the government said: ‘We are going to phase out the $100 bill by 2024, then the $50 note by 2025 and the $20 by 2026’,” Holden said.

“By giving a timeframe for the transition, people would have time to prepare.”

💬 Conversation starter

Sweden and India: a cautionary tale

Sweden announced it would be completely cashless by 2023 but, spoiler, they are not.

They are however the closest nation to it.

The Scandinavians have done a better job than when India’s PM withdrew 86 per cent of the nation’s currency in circulation overnight in 2016.

Of the 1.3 billion people living there, 98 per cent used cash. The lines to exchange for new currency were dire. It didn’t help that the new notes didn’t fit ATMs so they all had to be changed.

❗ It’s hard to believe, but…

A cafe in Queensland has gone completely cashless, but not for the reason you’d think.

Annee's Caphê Sua Da was broken into and owner Annee Nguyen made the call to make sure her “shaken up” staff felt safer at work.

Other crime-plagued small businesses in North Queensland are considering the same move.

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