Tech Talk | Cashless society

Future of Finance: A customer pays by Visa payWave. Contactless payment systems have become popular in an increasingly cashless society.
Future of Finance: A customer pays by Visa payWave. Contactless payment systems have become popular in an increasingly cashless society.

Buskers. School canteens. Tips. Coffees. These are the reasons people often give me to support the argument that we will never be a cashless society. I accept the fact that it may well be a long time before we are cashless but never is a very long time indeed.

It reminds me of the arguments put forward many ears ago when offices started installing document scanners. The talk in technology circles was that we would be paperless within a few years. My logic was that we would not be paperless but we would definitely be paper-less. A subtle hyphen emphasises the fact that we will be using less paper but not necessarily no paper.

The technological progress should dictate that we are using dramatically less paper. It might seem that the opposite is true as our worldwide paper usage has gone up 50 per cent since 1980.

Statistics can be misleading though. The worldwide population has gone up by 71 per cent in that same time so our rate of paper usage per capita is actually reducing. It has still some way to go though as we use 230 kilograms of paper per person every year in this nation.

Back to the cashless society. Using the same logic as paper, I am not convinced we will see a cashless society in my lifetime but I am quite definite that we are already seeing a cash-less society.  Ten years ago, 69 per cent of consumer payments were made with cash. Today, that figure is down to 37 per cent.

That percentage is by the number of transactions but when you break it down to the value of transactions, we are now down to 16 per cent of the total value of transactions occurring with cash.

That means we are using cash for small transactions – such as coffee or food rather than large purchases. On average we only carry $55 cash in our wallet and we visit an ATM less than once a week with ATM withdrawals at a fifteen year low. We are not at the top of the tree though – we rank at number six in the world of cash-less economies.

Sweden tops the tree with only a quarter of people living in Sweden saying they use cash every week and their volume of transactions is now down below 15 per cent with notes and coins banned on buses and many tourist attractions refusing cash.

In the banking sector, only five per cent of the major banks in Sweden are equipped to handle cash and I found several cafes that are cashless. One in particular had some issues with cash robberies over a period of time so decided to go with a no cash policy.

Is Sweden gaining any benefits from reducing the reliance on cash? Electronic transactions are quicker and cost less in terms of labour and make the entire payment system more efficient. It is also difficult for individuals and organisations to circumvent the tax system so more tax is collected by the government. It is estimated that in Australia up to 15 per cent of our Gross Domestic Product is in our black economy. If all of this money was taxed, it would result in lower taxes for all of us.

I was on a national radio program several years ago and made a comment that cafés that only accepted cash were doing so primarily to avoid tax. I copped heavy criticism for that comment but a recent survey shows that businesses that only accept cash are viewed negatively with 89 per cent of people having a negative view of those businesses and 42 per cent of people think they are trying to avoid tax with 19 per cent thinking that it shows the business as unsophisticated.

Australia may soon catch Sweden with the New Payments Platform (NPP) that will be introduced later this year. It is a consortium of organisations, including the Reserve Bank, that will allow Australians to send money to any other person or business in real time at any hour of the day.

The are 500 billion banknotes and trillions of coins across the world currently in circulation. Are we about to become a cashless society? I don’t think so right yet but we are definitely moving quickly towards a cash-less society.