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How a cashless society would work


While many Australians want to keep it as an option for making purchases, we need to be prepared for an economy with little or no cash in circulation.

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In recent years, the concept of a “cashless society” has evolved from a futuristic idea to a realistic possibility. 

With the rapid advancement of digital payment technologies, nations worldwide are gradually moving away from physical cash, and Australia is no exception. 

As cash usage declines, it’s worth exploring what a cashless society might look and what implications it would have for the economy and everyday Australians. 

The decline of cash


Cash usage in Australia has been steadily decreasing for several years.  

This trend was already in place before the pandemic – according to the Reserve Bank of Australia (RBA), cash was used for just 27% of all payments in 2019, a significant drop from 69% in 2007. 

COVID-19 accelerated the pace of change, with many businesses and consumers favouring contactless payments to reduce physical contact. By 2022, cash was used in just 16% of in-person transactions. 

The decline in cash usage has also led to lower numbers of bank branches and bank-operated automatic teller machines. 

National Seniors Australia has been spearheading a campaign to keep cash in the economy for those who wish to use it, but we need to consider a future where digital transactions reign supreme. 

Key features of a cashless society


  • All, or nearly all, transactions would be conducted electronically. Australians would use mobile apps, digital wallets, and contactless cards for everyday purchases. This would also extend to person-to-person transactions, with money transfers happening instantly across mobile banking apps. 

  • Banks and financial institutions would operate almost entirely online. Branches would become even less common, with customer service shifting to virtual channels. Financial services, including loans, investments, and insurance, would be managed through digital platforms. 

  • Government payments, such as pensions, welfare benefits, and tax refunds, would be transferred directly into bank accounts or digital wallets. Taxation could become more streamlined, with digital records making it easier for the government to track income and spending, potentially reducing tax evasion. 

  • As cash becomes obsolete, the need for ATMs and cash-handling services would diminish. Retailers would no longer need to manage cash registers or transport money to banks, reducing costs associated with cash handling. 

  • While a cashless society offers convenience, it also raises concerns about privacy and security. Digital transactions leave a traceable record, which could be exploited by hackers or lead to increased surveillance by authorities. Australians would need to be vigilant about cybersecurity and data protection in a fully digital economy. 

Implications for society


  • A significant concern in a cashless society is the impact on vulnerable populations, such as the elderly, low-income individuals, and those without access to digital technologies. These groups may find it challenging to adapt, potentially leading to exclusion. The government and financial institutions would need to implement measures to ensure these populations are not left behind, such as providing affordable digital devices and education on using digital payment systems. 

  • In a cashless society, consumer behavior could change significantly. Australians might find it easier to spend money when it’s not in physical form, leading to higher consumption and potentially increased personal debt. On the other hand, the convenience of tracking spending through apps could help consumers better manage their finances. 

  • The RBA would play a crucial role in a cashless society, ensuring the stability of the digital payment system and protecting the interests of consumers.  

  • A cashless economy could enhance Australia's economic resilience by reducing the risk of money laundering, tax evasion, and other illegal activities associated with cash. However, it also introduces new risks, such as cybersecurity threats and the potential for system failures, which could disrupt the economy. Robust infrastructure and regulatory frameworks would be essential to mitigate these risks. 

The advent of a cashless society would offer both benefits and challenges for Australia. 

As the landscape of money continues to evolve, it is crucial for policymakers, businesses, and individuals to stay informed and prepared for the changes ahead. 


This article and any links provided are for general information only and should not be taken as constituting professional advice. National Seniors is not a financial advisor. You should consider seeking independent legal, financial, taxation or other advice to check how any information provided relates to your unique circumstances. 

Disclaimer

National Seniors Australia Ltd ABN 89 050 523 003 arranges deposits as an authorised representative (AR 282736) of Auswide Bank Ltd, ABN 40 087 652 060 Australian Financial Services Licence 239686. We do not provide any advice based on any consideration of your objectives, financial situation or needs. A target market determination can be obtained at auswidebank.com.au/tmd. Before making a decision to invest, please consider the Terms and Conditions. If you make a deposit, we will receive a commission from Auswide Bank. For more information about our relationship with Auswide Bank please read the Financial Services Guide contained in the Terms and Conditions.*This account is protected by the Australian Government deposit guarantee. Up to $250,000 of deposits in ‘protected accounts’ held by an entity with Auswide Bank are covered under the Financial Claims Scheme. Information on the Financial Claims Scheme is available at www.fcs.gov.au.

Compiled by

Brett Debritz

Brett Debritz

Communications Specialist, National Seniors Australia

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