According to the Reserve Bank of Australia (RBA), the average Australian makes over 500 electronic payments a year. That makes us the sixth most cashless society in the world. Indeed, there are projections that Australia could become Asia-Pacific’s first cashless society by 2022.
RBA Governor Dr Philip Lowe emphasised this at the November 2018 Australian Payments Summit, saying, “it is now easier than it has been to conceive of a world in which banknotes are used for relatively few payments, that cash becomes a niche payment instrument.” Lowe foresees an environment for Australian business where the average cost of cash transactions will likely rise as the volume of cash transactions falls.
Yet little thought is given to the operational costs associated with cash, beyond the bank and cash courier fees to deposit cash. To name a few, there are costs involved in manual handling and fraud mitigation, such as requiring two staff be involved in manual handling of cash. There’s also the capital expenditure associated with the physical cash register including separate secure storage and CCTV, as well as the time consuming investigation of the all-too-common discrepancies that arise when reconciling cash deposits. Furthermore, as the amount of cash collected falls and low interest rates prevail, for some businesses the cost to deposit cash daily may now exceed the cash flow benefit.
While many consumers value the convenience and choice of payment methods on offer, non-cash payments don’t work for everyone yet. Swedish and UK reviews have found that going completely cashless can leave behind vulnerable members of society. Nevertheless, Sweden and China have demonstrated that falling cash acceptance by merchants and retailers is more likely to drive the death of cash than government mandates. More information on the accelerating decline in cash payments and the certain increase in their costs, read the full report here.