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A cashless society is not coming, it’s already here

Cash is king, but not for long.

Compilation image of pile of cash and credit cards
Just 13 per cent of Aussies use cash on a daily basis. (Source: Getty) (Samantha Menzies)

Aussies have been making one simple change amid the cost-of-living crisis: Moving away from cash. And while many say a cashless society is nothing more than a myth, the data tells a different story.

According to a recent press release from Cash Welcome, a cash advocacy group, ATM withdrawals are on the rise. Citing two years of data from the Reserve Bank, the group argued the notion of a cashless society was nothing more than a fallacy.

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At a glance, the chart they produced - presented in edited form below - does appear to show a slight increase in ATM withdrawals in June - helpfully highlighted in the press release with a red circle. But the bigger picture tells a different story.

Charts on cash use
(Source: Cash Welcome)

When considering the full range of data from 2008 to the present, the minor uptick becomes inconsequential. This limited perspective presented by Cash Welcome uses a classic data-manipulation trick - focusing on a specific subset of data that aligns with a particular narrative while ignoring the broader context.

Instead, the full 15-year data set reveals a stark trend: a consistent decline in ATM withdrawals.

Charts on cash use
(Source: Finder/ABS)

From a peak of 77.9 million withdrawals in December 2008, the figure has gradually declined to 29.7 million by June this year. While the COVID-19 pandemic led to a significant drop in ATM use in Australia - plunging as low as 21.8 million in April 2020 - the subsequent rebound merely aligns with the pre-existing downward trajectory, meaning the pandemic hasn't had any lasting effect on the overarching decline of ATM use.

How many Aussies actually use cash?

Finder’s Consumer Sentiment Tracker adds another layer to this narrative. Currently, a mere 13 per cent of Australians use cash daily, with 31 per cent opting for cash transactions just once a week.

The generational breakdown is even more revealing. Daily cash use sits at 19 per cent for Baby Boomers but dwindles to 15 per cent, 12 per cent, and 5 per cent for Gen X, Y (Millennials), and Z, respectively. Younger Australians are steering clear of cash in larger and larger numbers.

Why is cash use declining?

The shift can be attributed to the surge in retailers - from traditional stores to food trucks and Big Issue sellers - accepting card payments. The pandemic-induced move towards card-only payments further accelerated this behaviour, introducing many Australians to lower-contact payment options.

But it's worth noting the downsides of a fully cashless society are significant. For instance, collecting a gold coin donation at a charity event or donating to a homeless person becomes more challenging without cash. Cash can also be a safe-haven and ticket to financial independence for those in abusive relationships.

Additionally, card payments in Australia often come with an extra charge - allegedly reflective of the extra cost of accepting digital payment. This charge ignores the fact that expenses linked with cash handling are significant too. The UK's ban on all payment-related surcharges offers a potential model for Australia.

Is Australia set for a cash-free future?

The march towards a cashless society is undeniable - but we will probably never see a 100 per cent cash-free economy. However, a world where you can conduct 98 per cent of your day-to-day transactions without using cash is as close to cashless as we can expect to get.

But, as with any societal shift, this transition presents both opportunities and challenges. While the convenience of cashless transactions is attractive, it's essential to ensure inclusivity and a fair go for everyone. As the old adage goes, "Cash is king", but the monarchy may be less relevant than ever.

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