ME’s study of 2,000 transaction account holders revealed that 61% of Australians now use less cash than they did 5 years ago.
Although cashless, card-based payments are now becoming the norm due to their convenience, there are many Australian workers who are losing out on extra income which often comes exclusively in cash form.
Cash in hand is no longer handy
Some of the biggest losers of the cashless trend are “cash in hand” service providers such as tradespeople. According to the survey, over the past 5 years, there’s been a 51% fall in the frequency of people paying for services with cash.
Hospitality staff have also been negatively impacted, with people tipping waiters 45% less often than 5 years ago. There were similarly large falls in charity donations on the street (44%), paying buskers and street entertainers (42%), and giving money to the less fortunate such as Big Issue street vendors (42%).
|What impact has going cashless had on how often you….||% less often|
|1. Pay for services with cash in hand i.e. tradies||51%|
|2. Tip waiters||45%|
|3. Donate to charity(s) on the street||44%|
|4. Pay buskers or street entertainers||42%|
|5. Give money to less fortunate people than you e.g. homeless||42%|
Based on transaction account holders who are using less physical cash than 5 years ago and have exercised the specific activity listed above.
Nic Emery, ME Head of Deposits and Transaction Banking, said inevitably there will always be winners and losers as technology advances.
“Consumers are benefitting from tracking their spending and innovations that make their lives easier such as apps that pay for coffee or parking,” he said.
“But there are also losers in the growing preference for digital money, including those who in the past have relied on gratuities and cash donations like waiters and charities.”
Emery says it is always useful to keep some cash on hand, particularly if you like to donate money.
With 61% of Aussies using less cash than 5 years ago, that leaves a sizeable minority (39%) using the same amount of cash if not more. So there are still many Aussies who are resistant to the cashless trend.
“The move to digital money may also exclude some Australians as ‘going cashless’ requires an active bank account, which many of our poorest are unlikely to have,” Emery said.
— ABC News 24 (@ABCNews24) December 18, 2015
Decrease in cash part of a worldwide trend
Australia is far from the only developed country seeing an increase in card payments – European countries are leading the worldwide transition to cashless economies. A mid-2016 report by Fung Global Retail & Technology found that more than 20% of Visa transactions in Europe would be contactless payments by year-end.
Western Europe has the world’s highest rate of smartphone penetration (74%), with North America not far behind (70%). This puts both regions in pole position to promote mobile phone-based payments. Visa and MasterCard expect all point-of-sale (POS) terminals in Europe to accept mobile payments by 2020.
Fung’s report also cited Citigroup’s Digital Money Index, which ranks countries on their readiness to migrate to digital payments. 9 of the top 15 countries in the Index were located in Europe, with Singapore 2nd and Hong Kong 5th. New Zealand and Australia ranked 16th and 17th respectively, reflecting a strong propensity to transition to a cashless economy.
Fung’s research revealed that the number of mobile payment users worldwide has grown exponentially in the past six years, from 113 million people in 2010 to nearly 450 million in 2016. Of those, approximately 164 million people were in the Asia Pacific region, by far the greatest number of any region worldwide.
The transition to cashless and mobile payments is an inevitable one, as the increased convenience and consistently improving infrastructure allow more and more people to use their debit cards for just about everything.