TRANSCRIPT
The saying goes 'cash is king'.
But in Australia, that's no longer the case. Just a decade ago, more than half of transactions were cash. Now, just it's just one in seven.
Professor Steve Worthington from Swinburne University says the transition away from cash has happened at an alarming speed.
“The COVID pandemic turbocharged the reduction of the number of merchants as we call them, who accept cash. Increasingly, merchants will not be wanting to accept cash because it cost them money to keep, to secure, etc. As consumers, we've become very used to using either a card or a wallet, a digital wallet, to make payments.”
As cash has become more scarce, it's become more expensive.
Recently, cash courier company Armaguard has run into trouble - requiring tens of millions of dollars to stay afloat.
Professor Worthington says the problem issues are a result of declining cash use.
“With the reduction in the use of cash, that has increased the unit cost of them providing cash to the various supply chains. Australia is a huge country, and when we're talking about delivering cash to regional areas, there's a lot of mileage involved.”
So how much does cash cost?
There's no clear number, but Senior Lecturer in Economics at the University of Canberra, Dr John Hawkins, says most of the cost is in distribution.
“Probably the main cost is distributing it. So getting it out to people and getting it safely back to banks. And I haven't found an exact figure for that, but judging by media stories, it's somewhere in there sort of hundreds and millions. I don't think the cost of operating the trucks and so on would have changed all that much, but certainly the amount of usage of currency has.”
Professor Worthington says it's becoming harder to acquire cash, too.
“Over the past six years, there's been a 37 per cent drop in the number of bank branches. And in the same period of the last six years, there has been a nearly 60 per cent drop in the number of ATMs. So we've got less and less opportunities to actually access cash.”
Dr Hawkins says it's the lack of cash use that has led to bank closures.
“There's fewer people who use them, fewer people who go into the bank branch now to withdraw cash. So there's fewer branches that are sort of viable.”
CEO of the Council of Small Business Organisations Australia, Luke Achterstraat says the government needs to ensure cash is accessible to all Australians.
“We would also be saying to government, that there is an obligation to make sure that no region is left behind. And if there are instances of market failure, then government needs to think about what its role is in ensuring that some of our society's most vulnerable people potentially in some remote and rural areas, that they're not disadvantaged and that they have the same rights to access their own money, as affluent people living in metropolitan areas.”
If people don't use want to use cash, why is it important it stays around?
Dr Hawkins says the Reserve Bank of Australia wants cash to remain.
The Reserve Bank has said that they want to keep cash available and that's because there are still people who rely on it. Particularly older people, people on low incomes, and people in remote areas tend to use cash more than inner city people.”
Anglicare Australia Executive Director Kasy Chambers says cash offers a kind of certainty.
“I think there's still no substitution for knowing that you've got dollars in your pocket. Credit cards, plastic, they don't quite feel the same. They're not as transferable.”
Ms Chambers says for a lot of Australians, it isn't easy to access digital banking.
“If you are somebody who isn't as perhaps technology savvy, someone who perhaps doesn't have a regular income or a secure income. We see that bank accounts are difficult to get for example for young people, for newly arrived migrants. Anglicare Australia works a lot with children who live in out of home care, as they grow up in foster care or even residential group care, it can be very difficult for them to prove their identity. And so there are a whole group of people for whom it's difficult to get a bank account.”
Dr Hawkins says it's a backup for when digital systems don't work.
“It's a sort of useful backup. I mean, people still find you sometimes to go into a shop and their EFTPOS machine isn't working. Or they want to charge you a surcharge, or if you want to give the children pocket money or something. So there's still some transactions that tend to use cash or that people like to have cash as a backup in case other things go wrong. I mean, we had cases of examples in the bushfires down the South Coast where people's credit cards were they weren't able to get any money out. The people who had a bit of cash on them didn't have a problem. The people who had no cash did have a problem.”
There's no obligation for businesses to accept cash in Australia.
Mr Achterstraat says it makes sense for some businesses to avoid physical currency.
“For many small businesses, they'll make decisions based on what suits their particular cohort of customers. For some small businesses, they may have invested in that technology to run things quite efficiently with their electronic payments, and therefore, it makes sense to have a significant offering in regards to that. They may have other reasons why they don't want to have significant amounts of cash on their premise.”
But he says cash is an important backup for businesses too.
“We would sort of provide some caution to small businesses that are going down that path. We saw during the Optus outage, that meant that a lot of electronic payment terminals were simply not in operation for up to a whole day. So a lot of small businesses had to rely on cash during that day to actually trade. So certainly putting all your eggs in one basket would apparently bring with it some risk. “
With the cost of cash so high, Dr Hawkins says we could see a scenario where a surcharge is applied when paying with it.
“It could be that it actually ends up flipping and they actually charge you more if you want to pay with cash and if you pay electronically, if it reaches a stage where few enough cash transactions that the cost of distributing cash becomes large.”
Professor Worthington says if Australians aren't using cash, there's a chance it could disappear.
“If you don't use it, you're going to lose it and the less and less we're able to access and use cash, the more likely it is that we will lose access to it the same way we have with paper cheques.”
Although less cash is being spent, there's still a lot in circulation.
Professor Worthington says there's a significant amount of cash stored outside of banks.
“The vast majority of cash in Australia is held as a store of wealth. If you counted them all together all those notes, and you divided them by the population of Australia, let's call it 26 million people. We would each have somewhere around about $4,000 in cash. I think that that's another way where people will be very resistant to see cash completely obliterated.”
