According to financial experts, cash will soon be a thing of the past with experts predicting Australia will be “functionality cashless” by 2025 and “actually cashless” by 2030.
The rise of a cashless society is already starting as customers are slowly being banned from withdrawing cash from ATMs, and some over-the-counter transactions are disappearing altogether. It appears that ATM rationing is the first step leading Australia to becoming a “cashless society.”
No more cash
According to a study by the Reserve Bank, approximately 16% of in-person transactions in Australia during 2022 were in cash.
With more financial transactions moving to the web, the decrease in cash transactions is leading large banking institutions to ‘crack down’ on withdrawals, close automatic teller machines and branches, and ban cash entirely.
Just last week, Macquarie Bank, Australia’s fifth largest authorised deposit, announced that it would be“phasing out our cash and cheque services across all Macquarie banking and wealth management products” between January and November 2024.
The Commonwealth Bank and ANZ have stopped cash withdrawals at some of their inner-city branches, and teller cash transactions are no longer available at Commonwealth Bank specialist centres in Sydney, Brisbane, and Melbourne.
What the financial experts are saying
There is the possibility that as we reduce the demand for cash, or reduce the availability of cash, then there’s going to be limited amounts of actual, physical cash held,” finance expert, Sarah Wells said.
This “cash rationing” could mean that banks will hold limited amounts of physical cash in their ATMs, leading them to set limits to ATM withdrawals and possibly even prioritising “their customers over other customers accessing their ATM.”
Wells predicts Australia is “well on our way” to banks being cashless by 2026.
Former senior research manager, Peter Tulip, who worked for the Reserve Bank from 2011 to 2020 said that ING’s online-only banking with no physical branches is likely to become more common in Australia.
It’s going to be weird for a bank not to do any cash transactions. That was one of their main functions,” said Tulip.
Richard Holden, a professor of economics at UNSW Business School agrees with Wells’ prediction.
I’d say we’ll be functionally cashless by the end of 2025 — it’ll just be a complete rarity,” said Richard Holden. “But unless the government gets involved to accelerate the process I think we’ll be actually cashless by 2030.”
What a cashless society means
Many of us rarely use cash anymore but there are still many demographics that prefer this method of payment. The demographic groups that traditionally used cash more frequently include the elderly, those on lower incomes and those in regional areas.
A cashless society can also make it more difficult for domestic violence victims to escape abuse without their spouse or partner tracking them down.
Wells feels this is one of the ‘flaws’ of a society moving away from cash. She says,
It will take a media story for a woman that’s trying to leave a bad situation and can’t do anything because it all has to be done online.”
Leaving a domestic violence situation is scary and dangerous enough. Depriving victims of the anonymity and freedom of cash can be the difference between life and death in some cases.
Other cashless concerns
Despite the convenience of paying with your phone or carrying a plastic card, or several, Graham Cooke, head of consumer research at Finder, a comparison website, considers moving towards a ‘cashless society’ is “not necessarily a positive move”.
Consumers may wind up paying more for the convenience of not carrying cash since many businesses charge a fee for accepting credit or debit cards to cover “the cost of the transaction”.
Additionally, many do not feel convenience is worth the loss of privacy. Online security is also a concern. Hackers and IT systems failing is a legitimate concern.
People must be able to access cash
Finance expert Sarah Wells believes that “there has to be something available for people if they need access to cash”.
She predicts the federal government will likely step in and allow the Australia Post to act as a bank, allowing tellers to dispense cash; acting similarly to the Commonwealth Bank, which was in operation from 1911 to 1991, when it slowly privatized.
While Dr. Vasantkumar believes cash is “unlikely to go away completely,” it is evident Australia is quickly on its way to a mostly ‘cashless society’. It will be interesting to see how things unfold and its impact on everyday life.