How close are we to a cashless society?

Money and Life
(Financial Planning Association of Australia)

With tap and go payments becoming ever more popular and the advent of instant transfers between domestic bank accounts, how much longer will we be using cash as a form of payment?  Find out more about when we can expect Australia to go completely cashless and what it means for us, as business owners and consumers.

Got any cash on you?

According to recent survey results produced by You Gov Galaxy and commissioned by payments provider Square, the average answer to this questions is likely to be ‘about $38’ if you’re under the age of 40. Baby boomers are much more likely to have a few more notes and coins on them, carrying $72 in cash on average. And almost five million Aussies haven’t visited an ATM within the last 4 weeks or can’t even recall the last time they withdrew cash[1].

Put this together with the Reserve Bank of Australia’s report from 2016 that found only 37% of payments in Australia were being made in cash and you can see where we’re heading – a time when having cash just won’t be necessary or practical for the vast majority of the transactions we make. Using the RBA’s data from 2016, comparison site Finder have forecast that cash could disappear completely from Australia as soon as 2026[2]. But do we have good reason to look forward to being a cashless economy and society?

Tap happy?

Unfortunately, the convenience of tap and go payments may end up having a negative impact on our ability to keep our spending within reasonable limits. According to a study from the University of Sydney, people can be expected to spend up to 50% more by paying with any payment type other than cash. “There’s good empirical evidence that people spend more money when they don’t actually have to use cash, and that goes across different alternative forms of payment,” says Donnel Briley, Professor of Marketing and Behavioural Psychology at the University of Sydney.

A survey of high school students back in 2017 demonstrated that many teens simply don’t understand key concepts around personal borrowing with credit cards. This makes them particularly vulnerable to the perils of buying something without really thinking through how much it costs in real terms. When there is interest to pay on their purchase, as well as the opportunity cost of h