Here's why Australia shouldn't go completely cashless

·5-min read
  • The coronavirus pandemic has led more Aussies to use cashless payment options.

  • Adjunct Professor at Swinburne University, Steve Worthington told Business Insider Australia why it wouldn't be ideal for Australia to become a fully cashless society as it would be "unfair" to certain groups like the elderly or disabled.

  • Worthington also mentioned these groups would be "financially excluded" if this happened.

  • Visit Business Insider Australia’s homepage for more stories.

Is it wise for Australia to become a fully cashless society?

The coronavirus pandemic has led many Aussies to use contactless payment systems instead of physical cash, whether it's using their card or their phone (think Apple Pay). According to a survey by Mastercard, 44& of Australians said they're using cash less often since the pandemic began.

It's not hard to imagine why, in the middle of a global respiratory pandemic. 80% of respondents in the Asia Pacific said they saw contactless payments as a cleaner payment option. In the future, 75% of Aussies in the survey said they'd keep using contactless payments once the pandemic is over.

"Consumer behaviour around payments has seen a shift since COVID-19, which has transformed the daily lives of Australians," Richard Wormald, Mastarcard Division President Australasia, said in a statement in April. "Australians are looking for a safe, clean and secure way to pay, which has seen contactless card and device transactions surge. It is clear that this is the preferred way to pay, now, and for the future."

But Australia going completely cashless – as in, totally ditching cash and cheque payments – isn't necessarily the best option, according to some experts.

Steve Worthington, Adjunct Professor at Swinburne University of Technology, told Business Insider Australia that it wouldn't be ideal to for Australia to become a fully cashless society as there are still groups of people who rely on cash.

"The elderly, people who are disabled [and] people who live in rural areas who still use cash and find it hard to acquire cash," he said,

Worthington specialises in issues related to how financial services are distributed, particularly through electronic channels. He mentioned research from the Australian Bureau of Statistics which found 2.5 million Australians don't have an internet connection, mainly due to lack of affordability or being digitally illiterate.

If Australia were to move to a completely cashless system, Worthington said there would be a group of people who are "in a sense financially excluded" as they can't get hold of cash or would find it hard to use the cash they have.

On top of that, banks have been cutting down on their available ATMs. According to the Australian Payments Network, there were 29,348 ATMs in Australia in March 2019. That has dropped to 27,870 by March 2020.

"The cashless element is a self-fulfilling prophecy," Worthington said. "It's becoming harder and harder to access cash through ATMs or bank branches. Therefore people have less opportunity to spend cash because then merchants don't accept cash any more."

The disadvantages of contactless payment options

While it may be more convenient to use contactless payments, issues can arise if there are system failures. Worthington explains that digital systems depend on two essential factors: telecoms infrastructure, which the payments go over, and a bank's IT system, which facilitates the use of services like contactless cards.

"There have been in the past, in recent times ... where things have fallen over – it can be the IT systems at the bank, it can be the telecoms provider like Telstra," he said.

"[If] you've paid to go into an underground carpark with your card and something falls over with the technology – and you've only got your card to get out of the carpark – then you really are stuck. And that's why I think people carry cash as a fallback position."

Not only that, Worthington said it would be "unfair" on particular groups of people if Australia were to go completely cashless. He pointed to Sweden, which is often credited as being the world's most cashless country according to the ABC.

"Their central bank has had to enforce [a rule] that the banks still offer cash," he said.

A "less cash society"

In the future, Worthington doesn't see a cashless society, instead, what he sees is a "less cash society".

But he also warned of the interruption to the cash infrastructure system if Australia lessens its reliance on physical cash. This system involves everything from the trucks that transport money into ATMs to security to people who clean and maintain ATMs. There may come a point where some people decide not to be in that business any more.

"Cash, it has to be delivered to the ATMs, has to be collected from the ATM, has to be cleaned, washed and stored," he said. "Once we're using less and less cash, that infrastructure might start to wither away so much so that it becomes unsustainable."

However, it may not be the end for ATMs just yet. Worthington mentioned a system in the UK name Link which links all ATMs together so regardless of which ATM, you can use your card, often without a cost.

And something like this could be an option for Aussie banks, allowing them to operate from a collective pool of ATMs instead of their own. "They would then need probably less ATMs, but nevertheless, it could still be sustainable," Worthington said.