Omari Gates
Australia is rapidly moving towards a cashless society. Cash payments are declining, with digital payments becoming more popular. This shift is propelled by the increasing use of tap-card technology and smartphone payment apps, and the launch of the New Payments Platform (NPP) in February. While some businesses are choosing to absorb the costs of using payment infrastructure, others are passing the charges on to consumers. The Australian government has also announced that businesses selling essential goods and services must accept cash from 2026, and cheques will no longer be accepted as legal tender from 2029. Despite the move towards a cashless society, there are concerns about the lack of support for older generations and those in regional areas to embrace digital payments, as well as the potential impact on financial literacy for children.
| Characteristics | Values |
|---|---|
| Cash as a percentage of transactions in 2019 | 13% |
| Cash as a percentage of transactions for some major banks | <4% |
| Projected percentage of cashless transactions by 2024 | 98% |
| Projected cash payments as a percentage of in-store purchases by 2024 | 2.1% |
| Australians using some form of digital payment solutions | 71.7% |
| Cash as a percentage of the value of point-of-sale transactions in Australia | 6% |
| Cash as a percentage of the value of point-of-sale transactions in the US | 12% |
| Cash as a percentage of transactions for over-65s in 2019 | 52% |
| Cash as a percentage of transactions for over-65s in 2022 | 27% |
| Percentage of those surveyed in 2022 who did not use cash at all | 50% |
| Percentage of those surveyed in 2019 who did not use cash at all | 33.33% |
| Percentage of those surveyed who used cash for all in-person transactions in 2022 | 5% |
| Percentage of those surveyed who used cash for all in-person transactions in 2019 | 10% |
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What You'll Learn
Cash transactions in Australia are declining
Cash transactions in Australia have been declining for many years. In 2019, cash made up only 13% of transactions in Australia, and today, some major banks report that cash is used in fewer than 4% of their dealings. According to a global report by the US-based financial technology company FIS, cash payments represent just 6% of the value of point-of-sale (POS) transactions in Australia, with Australia having the lowest usage of cash in the Asia Pacific region in 2022. This decline in cash usage has led to vulnerabilities, particularly in cash deposit services, where the additional distance to the nearest access point has increased significantly.
The shift towards a cashless society in Australia is propelled by both consumers and businesses. On the consumer side, the popularity of tap-card technology and smartphone payment apps shows that Australians are becoming more comfortable with paying without cash. Recent Roy Morgan research also shows that 71.7% of Australians used some form of digital payments solution, such as PayPal or BPay, in the previous year. On the corporate side, the launch of the New Payments Platform (NPP) allows for immediate and easy transactions between households, businesses, and government agencies.
While the decline in cash transactions is evident, there are still pockets of resistance to digital-only payments. Lower-income, older, and regional Australians are more likely to use cash, and cash usage has declined the most among this group, particularly those over 65. Privacy and security are the biggest reasons for using cash, and many older Australians feel safer using cash because it's what they know. Additionally, there is a common belief that handling physical money is the best way to teach children financial literacy.
Despite the move towards a cashless society, the Australian government has announced that businesses selling essential goods and services must accept cash from 2026, ensuring that those who rely on cash are not left behind.
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Digital payments are becoming more popular
Australia is swiftly moving away from physical cash, with digital payments becoming increasingly popular. In 2019, cash made up only 13% of transactions in Australia, and today, some major banks report that cash is used in fewer than 4% of their dealings. According to the FIS Worldpay Global Payments Report, Australia is projected to be 98% cashless by 2024, with cash payments expected to decline to just 2.1% of in-store purchases. This trend is evident across all age groups, with cash use declining the most among the over-65s since 2019—from 52% of transactions to 27% in 2022.
The rise in digital payments can be attributed to the convenience and security offered by technologies such as tap-card technology and smartphone payment apps. Australians are becoming more comfortable paying without cash, no longer feeling the need to carry it around. The launch of the New Payments Platform (NPP) also enables households, businesses, and government agencies to make immediate transactions using a simple payment ID. Real-time global payments are becoming the norm, with companies like OFX working to improve the customer experience with faster payments.
Digital tools also offer improved ways to teach financial responsibility. Apps that track spending, set budgets, and allow users to create separate accounts for different spending goals provide interactive and detailed insights for better money management. These tools can empower young people to understand their spending and saving habits.
However, the shift towards a cashless society also presents challenges. There is a need to support older generations in embracing digital payments and to build the necessary infrastructure, especially in regional areas. Additionally, privacy and security concerns persist, with some individuals feeling more secure with physical cash. The decline in cash usage also impacts the viability of maintaining the infrastructure for handling physical money, such as ATMs and bank branches.
Despite these challenges, Australia's transition to a cashless society seems inevitable. Cash is no longer the preferred financial transaction method, and businesses are also recognizing the benefits of digital payments, such as reduced risks and labour involved with handling cash. As consumers and businesses demand seamless payment options, Australia is expected to become increasingly cashless in the coming years.
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Older generations are slower to embrace digital payments
Australia is swiftly moving towards becoming a cashless society. Experts predict that Australia will be virtually cashless within five to eight years, with some estimates placing this shift as early as 2024. This transition is propelled by the growing popularity of tap-card technology and smartphone payment apps, which offer convenience and ease of use. Despite this, older generations in Australia have been slower to embrace digital payments and the shift towards a cashless society.
Historically, consumers aged 65 and above have been high cash users, with a preference for physical money due to familiarity and a sense of security. However, recent trends indicate that older Australians are gradually adopting digital payment methods. In 2022, consumers aged 65 and above used cards for nearly two-thirds of their payments, reflecting a significant increase in card usage among this age group. While this suggests a growing openness to digital payments, there is still a notable preference for cash among older generations.
Several factors contribute to the slower adoption of digital payments by older Australians. One key reason is the comfort and familiarity with physical money. Many older individuals feel safer using cash because it is what they know, and they may have concerns about cybersecurity and the constant changes in technology. Additionally, age-related impairments can pose challenges when using digital devices, especially with small font sizes or tasks involving voice communication.
To help older generations embrace digital payments, it is essential to address their concerns and provide support. This includes ensuring that digital banking interfaces are accessible and user-friendly for older adults, with options for larger font sizes and clear instructions. Additionally, providing education and training can empower older individuals to feel more confident in using digital payment methods and understanding the benefits of cashless transactions.
While Australia's progress towards a cashless society is undeniable, it is important to ensure that older generations are not left behind. By offering the necessary resources and addressing their unique challenges, older Australians can feel empowered to embrace digital payments and participate fully in the evolving economy.
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The Australian government will force some shops to accept cash
Australia is rapidly moving towards a cashless society. In 2019, cash made up only 13% of transactions in Australia, and today, some major banks report that cash is used in fewer than 4% of their dealings. According to a global report by the US-based financial technology company FIS, cash payments represent just 6% of the value of point-of-sale (POS) transactions in Australia. This makes Australians among the least likely in the world to pay with cash. Despite this, the Australian government has announced that businesses selling essential goods and services must accept cash from 2026.
This mandate comes as a relief to the small pockets of the population that still rely on physical currency. RBA surveys show that lower-income, older, and regional Australians are more likely to use cash. Cash use has declined the most among over-65s since 2019, from 52% of transactions to 27% in 2022. However, the trend is similar across all age groups, with debit and credit cards overtaking cash as the preferred payment method in recent years.
The Australian government's mandate to ensure businesses accept cash from 2026 aims to protect those who still depend on physical currency. Australians most commonly use cash for leisure activities such as eating out and gambling, and for services such as hairdressers and babysitters. While the country moves towards a cashless future, it is important to consider the needs of those who may face challenges in adopting digital payment methods.
The transition to a cashless society has been propelled by the popularity of tap-card technology and smartphone payment apps. Real-time global payments are becoming the norm, and companies like OFX are working to improve the customer experience with faster payments using the NPP in Australia. While many older Australians are nervous about using technology and prefer cash, the advantages of a cashless society are significant. These include increased convenience, security, and efficiency in transactions.
As Australia moves towards a cashless future, the government's mandate to force some shops to accept cash ensures a gradual transition that considers the needs of all citizens. While digital payments offer improved financial literacy tools and security, the infrastructure and education must be in place to support those who will inevitably face this digital shift.
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The pros and cons of a cashless society
Australia is rapidly moving towards a cashless society. In 2019, cash made up only 13% of transactions in Australia, and today, some major banks report that cash is used in fewer than 4% of their dealings. According to the FIS Worldpay Global Payments Report, Australia is projected to be 98% cashless by 2024. Despite this, there are concerns about the country's readiness for this shift, particularly regarding the older generation, regional areas, and those who feel more secure with physical money.
The Pros of a Cashless Society
A cashless society offers several benefits, including:
- Convenience and Speed: With digital payments, there is no need to carry cash, and transactions are often faster and more seamless than handling physical money.
- Improved Financial Literacy: Digital tools and apps can provide real-time insights into spending and saving habits, helping individuals better understand money management.
- Safety and Security: Carrying large sums of cash can expose individuals to physical risks, such as theft. In a cashless society, transactions are less likely to be targeted by criminals, and it may be easier to track and recover stolen funds.
- Reduced Costs: The infrastructure required for handling physical cash, such as ATMs and armoured cars, can be costly. A cashless society could reduce these expenses for banks and retailers, potentially resulting in savings for consumers.
- International Travel: Travelling internationally without the need for exchanging currencies can be more convenient and efficient.
The Cons of a Cashless Society
However, there are also several drawbacks and concerns associated with a cashless society:
- Privacy and Security Risks: Digital payments may increase the risk of data breaches, hacking, and identity theft.
- Technological Dependency: A cashless society relies on stable and secure technology. System vulnerabilities due to natural disasters or cyber-attacks could prevent people from accessing their money.
- Economic Inequality: The transition to cashless may disadvantage those who lack access to technology or smartphones, particularly the elderly, rural communities, and low-income individuals.
- Fees and Charges: With fewer people using cash, the cost of maintaining payment infrastructure may be passed on to consumers in the form of increased fees and charges for electronic transactions.
- Overspending: Some people find it easier to control their spending with physical cash. In a cashless society, it may be more challenging to stick to a budget and avoid overspending.
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Frequently asked questions
No, Australia is not cash-free. However, the use of cash for day-to-day transactions has been declining over the years, with cash payments representing only 6% of the value of point-of-sale transactions in Australia as of 2023. Australia is projected to be 98% cashless by 2024.
There are several reasons for Australia's shift towards a cashless society. Firstly, the popularity of tap-card technology and smartphone payment apps has made people more comfortable with digital payments. Additionally, digital tools offer better ways to teach financial responsibility and track spending. Real-time global payments are also more efficient and cost-effective for businesses.
Australia faces several challenges in becoming a cash-free society. Firstly, there is a need to help older generations embrace digital payments, as they often feel safer using cash. There is also a lack of infrastructure in regional areas, and education is required for people who feel more secure with physical money.
