Cash transactions are experiencing a significant decline in Australia, reaching an all-time low. According to the Reserve Bank of Australia (RBA), only 13% of payments in 2022 were made using cash. The proliferation of digital payment methods, including the convenience of mobile phone payments, has contributed to this downward trend.
Antiquated Forms of Payment
Even credit and debit cards are starting to feel outdated in comparison to the convenience of tapping phones for transactions, notes Chris Berg, the director of RMIT Blockchain Innovation Hub.
The Impact of the Pandemic
The COVID-19 pandemic accelerated the decline of cash payments, especially during the initial two years of the pandemic when online shopping surged. The data suggests that the shift away from cash is likely to persist beyond the pandemic.
Challenges of a Cashless Society
While transitioning to a cashless economy offers benefits such as increased convenience, transparency, and safety, there are concerns that this shift could exclude segments of society.
Exclusion of Vulnerable Groups
The move away from cash can disproportionately affect disadvantaged communities, including people with disabilities, remote and regional residents, and those without easy access to digital financial services. Many older individuals still rely on cash, and lower-income households use cash more frequently than their wealthier counterparts. The unbanked population, including undocumented workers and newcomers without identification, could face significant challenges in a cashless society.
Lessons from Sweden
Sweden, an early adopter of a cashless economy, faced backlash due to concerns about financial exclusion among marginalized communities. Removing cash-handling infrastructure left certain vulnerable groups struggling. This example highlights the potential pitfalls of pursuing a cashless society too aggressively.
Cash as a Lifeline
Cash provides a lifeline for victims of abuse who may have limited access to digital financial services, offering a discreet means of purchasing necessities and reducing the risk of being tracked. Additionally, in emergencies such as natural disasters, cash remains invaluable when digital networks are compromised.
While regulators argue for phasing out cash to enhance transparency, this approach can compromise privacy. Cash offers privacy advantages, especially in industries like sex work, where customers prefer the discreet nature of cash transactions.
Changing Roles of Cash
The onset of the pandemic led to a surge in demand for cash, not primarily as a payment method but as a security measure. People sought the comfort of holding onto cash during times of uncertainty.
Balancing Inclusion and Viability
Australia, like Sweden, must find a balance between encouraging financial inclusion and ensuring the continued viability of cash. While cash transactions may be decreasing, the amount of cash in circulation has risen, with people using it as a form of security.
In conclusion, Australia’s move towards a cashless society has raised valid concerns about financial exclusion, privacy infringements, and the potential risks of excluding vulnerable populations. Striking a balance between technological progress and social inclusion remains a critical challenge for policymakers and regulators.