Cashing in on the cashless society

While the world’s media was trying to get a handle on Russia and Ukraine, my counter-cyclical approach was to investigate the move towards a cashless society.

Retailers and banks have been (stealthily), moving away from having their shop assistants and tellers handle cash. Maybe it was already happening, but the Covid-19 pandemic accelerated the push by retailers in particular, to insist on people using a debit card to pay for goods and services. The rational was to slow the spread of germs, although one might be aghast at the results of swabbing an ATM keypad or EFTPOS machine.

A majority of Australians (55%) now has become used to internet banking, electronic bill paying and using debit or credit cards to buy goods and services.

In 2022, the Reserve Bank issued a technical bulletin about the use of and distribution of cash in Australia. The Bank’s Consumer Payments Survey (CPS) showed that the share of total retail payments made in cash fell from 69% in 2007 to 27% in 2019. The results from the 2022 study will be published later this year.

The RBA used multiple surveys to explain the rapidly declining use of cash in Australian society. The Online Banknotes Survey (OBS), commissioned by the RBA, asked individuals about their cash use behaviour. In 2022, cash was used by 25% of respondents in their most recent  transaction. Debit and credit cards remain the most popular payment method, although electronic options such as tapping with smartphones or watches are becoming more prevalent.

“The survey points to a permanent shift in payment behaviour for a significant proportion of the population; 39% of respondents said they have been using cash less often since the pandemic began. Those on lower incomes were more likely to have used cash for transactions and consider themselves high cash users.

On Sunday the host of Australia all Over, Ian McNamara, read out a letter from a listener who had taken a cache of cash to a bank branch. She was told the coins (in bags) could not be accepted as ‘we are a cashless bank’”.

“The world’s going to hell in a hand basket,” Macca opined, citing a phrase originating in mediaeval times.

The cashless bank issue was also canvassed by talkback radio 3AW, after a listener emailed to describe his run-in at a bank branch.

ANZ Victoria and Tasmania general manager Cameron Home confirmed in a statement to the radio station that “a small number” of branches “no longer handle cash at the counter”.

“At these branches cash and cheque deposits and cash withdrawals continue to be possible through a smart ATM and coin deposit machines.”

The ANZ spokesman did not quantity the number of branches refusing to take cash at the counter.

This trend poses a quandary for those of us who traditionally save coins. My pink piggy bank had reached the stage where there was no more room for the coins that accumulate like used tissues in the pockets of jeans and jackets. Many people have a piggy bank, an old cigar tin or biscuit barrel in which they throw their loose change. Nobody wants to keep $20 of loose change in their wallets, purses, handbags or pockets.

So, many of us have this habit, particularly if we are children of depression-era parents, of savings coins then banking them once the amount makes it worth the effort.

She Who Also Hoards Cash routinely throws $1 and $2 coins in a tin. Come Christmas she will count said cash, bank it, then use the $200 or so to buy ‘Christmas plonk’.

This week I laboriously counted and separated the cash into the correct denominations (in plastic bank bags).

All banks have scales and machines which can quickly and accurately confirm that a bag indeed contains $50 in $2 coins (or $7.80 in 20c pieces). Some branches can tip a mixed bag of cash into a machine which will automatically sort and count the cash in a matter of seconds.

I decided to spend an hour or so with a practical demonstration of how one fares trying to deposit $160 in coins at a bank branch. Our family bank (Suncorp) was closed – 9.30 – 2.00pm Monday to Friday). Did you know Suncorp had sold its banking business to ANZ Ltd? (No. Ed)

I then went to the Warwick Credit Union and the teller deposited the coins with no fuss at all. As part of the exercise, I learned that many banks now expect small business customers to deposit cash via a “Smart ATM”. I can only wonder how this will go with people who operate cash-only businesses (markets, busking, CD sales and so on).

The deep flaw in the concept of a cashless society is what happens when the technology (which relies on electricity and technology that works 24/7) fails. Almost on cue, we had an Australian banking example when some Commonwealth Bank customers were unable to log in to their accounts online.

The bank apologised to its customers after a major glitch left them unable to make purchases with their bank cards or access their accounts.

Customers received error messages when trying to use the NetBank online banking service and the CommBank mobile app.

It’s not the first example (for any bank or business for that matter) finding that their ‘smart’ apps can and do fail.

As dedicated readers may recall, we spent a week marooned in a regional town in New Zealand without mobile phones, internet or ATMs. Good thing the hire car had a full tank, eh! The town was cut off from the world in the aftermath of a catastrophic cyclone. A small supermarket near where we were staying had fired up its generator and served customers on the basis of ‘cash is king.’ EFTPOS payments were possible, but only after a long wait in a queue.Despite these occasional ‘hiccups,’ the banking industry seems  determined to introduce labour-saving technology, even if it sends their customers to hell in a hand basket.

A survey by RFI global asked merchants what their future intentions were towards accepting cash. The data suggest that half of merchants that accepted cash in April 2022 planned on actively discouraging cash payments or displaying signage to that effect at some point in the future. Those merchants that plan to move away from accepting cash were more likely to have higher turnover and be in metropolitan areas. The pandemic appears to have influenced some merchants’ plans to dissuade cash use, with hygiene concerns around cash handling as the most prominent reason. The risk of theft and the cost of sourcing cash are other reasons.

Meanwhile, the traditional source of cash for so many Australians (automatic teller machines or ATMS), is in decline. Since 2016, when ATM numbers peaked at 8,000, 25% have closed. Most of these closures have been ATMs owned by authorised deposit-taking institutions. Some of these ADIs, as they are known, will charge you a fee of up to $3.00 to make a withdrawal.

The latter is yet another argument I have against the banking system in general. Banks charge fees for almost every aspect of banking, be it in person or via internet banking. Virtually all merchants charge a fee when you use a credit card to make purchases (e.g, $5.90 added to a return ticket to NZ). Many banks charge a monthly fee for maintaining business and even personal accounts. Moreover, these fees increase over time.

It could be a mistake to ascribe the tap and go trend on Millennials or Generation Z.

I was at a choir reunion last month when an elegant 70-something woman, having ordered a pizza, leaned over towards the EFTPOS machine and waved her smart watch at it. Ka-ching!

More reading: what can go wrong will go wrong