Cash will always have a place in Australian society, according to Reserve Bank governor Philip Lowe.
At the height of the COVID-19 pandemic in Australia, a large number of Australians abandoned cash in droves, preferring to make contactless payments.
Many economists thought that the coronavirus would play a role in accelerating Australia’s move towards becoming a cashless society, but Mr Lowe told a virtual forum for the Australian Payments Network that cash would always have an important role to play.
“I don’t think we are going to get to the point of being a cashless society,” Mr Lowe said.
In May, credit card company Mastercard reported a 44 per cent decrease in the use of cash when making purchases in person since the COVID-19 outbreak began.
The pandemic led to a huge behavioural shift in payment methods, with 94 per cent of Aussies making contactless purchases at the grocery store, 70 per cent doing so at a pharmacy and 56 per cent at any other retailer.
Mr Lowe noted that there was also a big drop in ATM withdrawals during the pandemic but said the stock of currency on issue was as high as it had been in the past 50 or 60 years, with strong demand for $50 and $100 notes.
“In the first days of the pandemic, I think people were nervous, some people were taking money out the bank, a bit like we saw in the GFC, although it wasn’t on the same magnitude,” Mr Lowe said. “That settled down pretty quickly.
“Cash still has an important role to play as an emergency payment method.
“I think we’ve all heard stories where a bank’s systems have gone down, a merchant’s internet isn’t working, they can’t do a transaction … many people will still want to hold cash.”
The fact that the Reserve Bank is backing cash to stay as the best alternative to electronic payments will be welcome news for those who fear greater use of credit cards will lead to money mismanagement and greater debt.
Still, there is no doubt that cash payments are on the wane, something that was happening well before the pandemic began.
The Reserve Bank’s 2019 Consumer Payments Survey, which was released in March, found that in the space of a decade cash went from being the dominant form of payment to only being used in a quarter of all transactions.
Last year, the federal government proposed laws to ban cash payments of $10,000 and more.
In April, the Australian Banking Association (ABA) reported that there were more than 500,000 customers that used accounts not linked to a debit card, which meant they were still reliant on cash or EFTPOS cards for paying for goods and services.
“A significant number of older Australians still operate passbook accounts with which they withdraw cash at a bank branch, and do not have any card linked to that account,” Council on the Ageing CEO Ian Yates recently told the ABC.
Do you still use cash for the majority of your transactions? Are you worried that you may be forced to live without cash at some point in the future? Do you think cash will always have a role to play in Australia?
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