When was the last time you paid for something in cash? The answer may well depend on your age, with a recent survey by You Gov Galaxy and commissioned by payments provider Square, showing that if you’re over 40, you’re likely to carry more cash on you, whereas those under 40 have on average only $38 in their wallet at any one time. The Reserve Bank of Australia’s report from 2016i found that only 37% of payments in Australia were being made in cash, with an increasing trend toward electronic and cashless payments.
So, what does this all mean? Put simply, tap and go payments such as Pay Pass and instant transfers are becoming more and more popular. Cash transactions are diminishing rapidly, with reportsii showing that almost five million Australians haven’t visited an ATM within the last 4 weeks or can’t recall the last time they withdrew cash. The trend towards cashless spending has us wondering if in the not so distant future, cash could disappear completely as a form of active currency. It’s looking likely. But is this a good thing?
While using tap and go to pay is convenient, a study from the University of Sydneyiii brings to attention worrying research that shows people are spending 50% more by paying with a payment type other than cash. Perhaps paying with a plastic card or your smart phone is too easy, eliminating the need to really think about the cost of the item being purchased in real terms. In addition, with easy access to pay later schemes like After Pay, there is also the concern of just how easy it is to accrue long term debt, particularly for those who don’t understand the key concepts around borrowing and credit.
The National payments platform (NPP)iv which was launched at the start of last year, has not been offered broadly by many financial institutions yet but is set to change up the way in which we transact money. Services like PayID and Osko, which many people are already using regularly, may well make cash obliterate. It seems that as a society, we are already on the move towards a cash free economy.
With the move away from cash creeping quickly towards us, it’s a good idea to stay abreast of the common debt traps that new payment services can draw us into and to remember the value of money, regardless of what form it comes and goes in.
i RBA, How Australians Pay, 2016, https://www.rba.gov.au/snapshots/how-australians-pay-snapshot/
ii The Australian, One-in-three shoppers go cashless: poll, Luke Costin, 17 September 2018, https://www.theaustralian.com.au/news/latest-news/oneinthree-shoppers-go-cashless-poll/news-story/f3ed60f050d15e5f1609da7a2497ba08
iii Business Insider, How Australia’s move to a cashless society is damaging millennials, Tony Yoo, 6 December 2017, https://www.businessinsider.com.au/how-australias-move-to-a-cashless-society-is-damaging-millennials-2017-12
iv Money and Life, What is the NPP and what’s in it for me, 16 April 2018, https://www.moneyandlife.com.au/banking/what-is-the-npp-and-whats-in-it-for-me/
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