Australia to be completely cashless in a decade?
13 Oct 2021
Australia is to become fully cashless by 2031 predominantly fuelled by the pandemic, according to experts polled by comparison website, Finder. The survey questioned 25 experts, with 56% saying they believed the country would go completely cashless over the coming decade. Finder added that 89% were of the opinion the Covid crisis has accelerated the cashless trend. Indeed, according to the company’s recent analysis of Reserve Bank of Australia data, ATM withdrawals have declined by 65% after peaking in December 2008.
According to Finder’s head of consumer research Graham Cooke, the lifespan for cash was reducing: “Finder predicted a cashless society in Australia by 2036 a few years back and now even that timeline may be too far away.” He continued: “Cash has already been pushed to the edges of our economy, and cash-only businesses are few and far between. Expect them to get even rarer.”
Latest cashless findings
The most recent data reveals July 2021 recorded the lowest number of cash withdrawals compared to any previous month of July on record. Moreover, a survey undertaken by Finder of 1,015 Australians showed 40% were using less cash than they were this time last year.
According to Australian National University expert Robert Breunig, worries about the coronavirus crisis have certainly accelerated the decline of cash usage. Furthermore, credit card or mobile phone payments also make transactions more straightforward and convenient. The shift to a cashless society also eradicates some types of tax avoidance, Breunig added.
“People often avoid tax by doing cash type jobs and if there is no cash under the table, then it’ll be easier to actually follow transactions,” director of the ANU’s tax and transfer policy institute said. “Some people might not like that idea, but in terms of fairness of everybody paying the same amount of tax, it is an improvement.”
Additionally, Breunig said it was the norm in the U.S. for tips to be paid via credit card, but it remains unknown whether this would lead to people leaving more or less tips. “My gut feeling is it probably would reduce their takings,” he said. “The other thing is it would of course mean now when they get tips they have to declare it for tax returns, but part of the idea of bringing more transactions into the visible system is that you can actually then cut taxes.”
He added: “If you’re taxing a greater quantity of transactions, then you can actually reduce the taxes, so that’s one potential upside. I suspect people will still find ways around it by giving undeclared gifts. We also have fringe benefits tax for that reason ... we know people can still get around these things with undeclared gifts.”
Moreover, these latest findings coincide with new Australian Banking Association (ABA) research that showed a 17% rise in debit card use last year and a 10% drop in cash withdrawals. “This trend hasn’t always been the case. In 2006, Australians used credit and debit cards equally. Twelve years later in 2018, Australians used debit cards at almost double the rate of credit cards and just three years later, it’s almost triple,” according to ABA CEO Anna Bligh. “Unsurprisingly, particularly due to stores encouraging cashless transactions throughout the pandemic, the use of cash declined a further 10% on the previous year, which is another sign of Australia moving closer and closer to a cashless society,” she said.
Cashless has been coming for some time
Before the pandemic, in 2018, Governor of the Reserve Bank of Australia, Philip Lowe said that the shift away from physical cash is of national interest, with the opportunity for dynamic innovation in electronic payments increasing. “The greater use of electronic payments can bring efficiency benefits, with lower costs and more functionality and choice for users,” he said. “I expect the shift to electronic payments will continue. The issues of functionality, security and reliability, and cost are central to the development of the system. The Payments System Board will be keeping a close eye on these issues.”