Macquarie Bank’s recent decision to ban cash transactions from its branches has reignited the discussion about Australia’s potential shift towards a cashless society. While the trend towards digital payments is undeniable, completely eliminating cash from the economy is unlikely in the near future.
Currently, a variety of factors contribute to the decreasing use of cash in Australia. The convenience of paying with phones, watches, and cards has led to fewer people relying on cash for daily transactions. Additionally, there is a significant number of cash-withdrawal points, including ATMs and supermarkets, ensuring easy access to physical currency.
It is estimated that around $100 billion in cash is in circulation across the country, consisting of 2 billion notes. Despite this, the government has not shown any intention of removing cash from circulation, and the Big Four banks have ruled out going completely cashless.
According to the Reserve Bank of Australia (RBA), ATM withdrawals have dropped from 77.9 million in December 2008 to 29.7 million in June 2023. A finder survey revealed that 13% of Australians never use cash, while 44% use it once a week and 42% once a month or less.
It is crucial to consider who still relies heavily on cash. The older generation, individuals with lower incomes, and those in regional areas are more likely to use physical currency. These groups would need to be considered if a cashless society were to become a reality.
While there are several advantages to transitioning to a cashless society, such as convenience, transparency, and reduced costs for businesses, there are also concerns. Vulnerable groups, including the elderly, socioeconomically disadvantaged individuals, and those in rural areas, may be negatively impacted. Additionally, the closure of regional bank branches and ATM charges pose challenges for certain communities.
Although there are groups advocating against the elimination of cash, the current landscape allows businesses and individuals access to cash through banks and supermarkets. To transition towards a cashless society, government intervention would be necessary, with a phased approach for removing different denominations of bank notes.
Looking at other countries’ experiences, Sweden announced its intention to become completely cashless by 2023. However, they have not yet achieved this goal. India faced significant challenges when its Prime Minister withdrew 86% of the nation’s currency in circulation overnight in 2016. While India has made progress towards digital payments, a large portion of the population still relies on cash.
As Australia contemplates the possibility of a cashless society, it is crucial to weigh the benefits and drawbacks and consider the needs of all individuals and communities. While the trend towards digital payments will continue, a complete elimination of cash may be a slow and gradual process.
- Macquarie Bank
- Reserve Bank of Australia (RBA)
- Finder survey