How close are we to a cashless society?

Once upon a time, cash was king in Australia – but that’s changed now.
Is a cashless society Australia's future?Getty

While you can still pay with notes and coins, the rise of cards and contactless payments make it seem like a cashless society is not that far away. In fact, cash makes up just 16% of payments, according to analysis from the Reserve Bank of Australia (RBA).

What’s more is that cash use has been steadily dropping since 2007 as card transactions rise. The pandemic had an influence too, with cash payments halving in the three years to 2022.

So it makes sense that there’s so much hype around cashless societies.

It’s not just Australia, either. Card and contactless payments have become popular around the world, leading to conversations about a cashless future.

For example, Sweden was expected to become one of the first cashless societies in the world. The central bank of Sweden, Riksbank, says cash is rarely used but still important to consider.

“In Sweden, cash is legal tender, but this does not mean that consumers have the right to pay with cash in all situations,” a 2024 report states.

“Cash is needed to enable everyone to pay and to provide an additional means of payment in the event of crisis or war.”

Similar conversations are being had in Australia, both in and out of government.

Cashless backlash

While the convenience of contactless payments is often praised, there are plenty of people who still want the choice to pay with cash.

It’s even gone as far as federal parliament with MPs Andrew Gee and Bob Katter introducing the Keeping Cash Transactions in Australia Bill 2024.

Mr Gee says in a media release that many Australians are worried that cash is being “phased out and will soon disappear.”

“While the use of cash for transactions in Australia has been declining, Australians should get to choose how they will pay for what they purchase — not financial institutions or businesses,” he says.

The Bill would make it a legal requirement for businesses operating in face-to-face settings to accept cash payments for transactions under $10,000.

Can businesses refuse to accept cash?

Businesses in Australia don’t legally have to accept cash payments. But the Australian Competition and Consumer Commission (ACCC) states that they need to be upfront about what payment methods they accept.

In other words, if a business is cashless, that should be clear before you need to pay. It’s also important to note that cashless businesses have specific requirements around surcharges.

“If there is no way for a consumer to pay without paying a surcharge, the business must include the minimum surcharge payable in the displayed price for its products,” the ACCC website states.

Withdrawing cash has become harder as banks close branches and ATM networks struggle.

Access to cash

How easy (or hard) it is to get cash is another factor in the cash vs. cashless payment debate.

The trend towards digital banking has led to many banks closing branches around Australia. There are also fewer bank ATMs where you could withdraw money for free.

On top of that, independent ATM operator Armaguard has had financial challenges over the past few years. It is one of the largest ATM operators in the country, with brands including rediATMs and atmx.

But in late 2023 questions were raised about its continued operations. As the Australian Banking Association (ABA) explained in a statement:

“Australia’s largest users of cash were approached by Armaguard in October 2023 and told by its representatives the business was not financially viable in its current form and that they needed financial support.”

Since then, parent company Linfox has announced funding for it.

But the situation highlights challenges to managing access to cash – and to people getting it when they need it.

What would happen if Australia became a cashless society?

First of all, this is years in the future. Countries around the world are having discussions about cash and cashless payments to try and figure out what comes next.

Some of the key considerations are:

  • Security for digital payment technology
  • Power outages that affect access to contactless payments
  • Cyber attacks and fraud
  • Costs in accepting cards and contactless payments (which are more expensive for businesses)
  • Costs to consumers in the form of surcharges
  • The accessibility of online banking and potential marginalisation of people who find it challenging
  • The impact it could have on charities, donations and “gold coin” events

A fundamental issue is whether a cashless society would impact people’s ability to access their money when they need it.

When the Keeping Cash Transactions in Australia Bill 2024 was introduced, MP Bob Katter gave this worst-case example:

“Imagine a scenario where you cannot buy a loaf of bread without the bank’s permission. This is not a dystopian fantasy; it is a very real possibility if we allow cash to disappear,” he says.

You can still pay with cash at many businesses in Australia.

How close are we to cashless?

Technically, the amount of payments made with cash means we’re more cashless than not in Australia. But RBA data shows around 7% of people still make all or most payments with cash – and we still have the option.

Realistically, there are challenges around digital infrastructure and accessibility to consider before cash could ever be phased out.

“Not everyone has access to digital banking – [older] citizens, those in remote areas, and individuals without the means or skills to navigate digital platforms rely heavily on cash,” Katter says.

“Removing cash from the equation marginalises these groups and exacerbates social inequality.”

This is echoed by Sweden’s Riksbank.

“Developments suggest that we should focus more than previously on the challenges posed by digitalisation,” it states in a 2024 Payments Report.

Meanwhile, the Institute of Economic Affairs in the UK has noted: “Banning cash would risk alienating and isolating those people who still chose to use it.”

“It would also outlaw a crucial competitive pressure on banks to innovate simpler, safer cashless products. Banks still have work to do to convince many to drop cash, so let them do it.”

So, although cash may not rule payments any more, it doesn’t seem to be going anywhere fast.

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