Australia’s transition to a cashless society is inevitable and could happen by the end of the decade, a finance expert has claimed.
RMIT associate professor in finance, Dr Angel Zhong said the shift to digital wallets and buy-now-pay-later (BNPL) was now evident not just in big cities but in remote Australia, too.
“The shift towards a cashless society in Australia isn’t just a possibility, it’s already well underway,” Zhong said.
“The convenience of digital transactions has become irresistible for consumers and businesses and has led to the sector eclipsing traditional payment methods.”
According to a report by the Australian Banking Association, at the end of 2022, cash only accounted for 13 per cent of consumer payments in Australia.
In 2007, that figure was 70 per cent.
About 40 per cent of Australians are now comfortable leaving home without their actual wallets or even credit and debit cards, the report found.
The use of digital wallet payments on smartphones and watches has soared from $746 million in 2018 to over $93 billion in 2022.
Zhong’s estimate that Australia will enter into a cashless society by 2030 is conservative, with the Commonwealth Bank predicting it will happen as soon as 2026.
But that doesn’t mean cash will disappear entirely.
”It doesn’t mean that there’s no bank notes at all. No one should be panicking that your banknotes will no longer carry value,” she said.
“If you look at the statistics about banknotes in circulation, it actually remains at around 20 per cent, according to the report, over the years.
“The meaning of cashless society is more about the way that we transact… it adds to the convenience of our day-to-day lives.
“There is always a place for cash but the majority will be making payments with digital wallets.”
As this transition happens, our payment systems need to be “fit for purpose” so they deliver for consumers and small businesses, Zhong said.
“We want to make sure the shift to digital payments occurs in a way that promotes greater competition, innovation and productivity across our entire economy.”
She said new regulations for digital payment providers unveiled by Treasurer Jim Chalmers last week were a big step to making a cashless Australia “secure and trustworthy”.
“It will subject BNPL and digital wallet service providers like Apple Pay and Google Pay to the same oversight by the RBA as traditional credit and debit cards,” she said.
“The regulations will require providers meet clear standards for security measures, data protection and dispute resolution to give Australians confidence their funds and personal information are safeguarded.
(9 NEWS)
