Australia to be completely cashless in a decade, experts predict, according to survey

Melissa IariaNCA NewsWire
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Camera IconNot Supplied Credit: News Regional Media

Australia will become fully cashless by 2031 as Covid-19 hastens the death of physical currency, according to most experts surveyed by Finder.

The comparison website surveyed 25 experts and 14 - or 56 per cent - said they believed the nation was on track to banish cash in the next decade.

Finder said 89 per cent believed the pandemic has accelerated its decline, a result backed up by the company’s recent analysis of RBA data, which showed ATM withdrawals had fallen 65 per cent since peaking in December 2008.

Its head of consumer research Graham Cooke said the lifespan for polymer money was shortening.

“Finder predicted a cashless society in Australia by 2036 a few years back and now even that timeline may be too far away,” he said.

“Cash has already been pushed to the edges of our economy, and cash-only businesses are few and far between. Expect them to get even rarer.”

Latest data shows that July this year had by far the lowest number of withdrawals of any July on record.

A Finder survey of 1015 Australians also found 40 per cent were using less cash than this time last year.

Comparison website Finder says cash-only businesses will become rarer and rarer.
Camera IconComparison website Finder says cash-only businesses will become rarer and rarer. Credit: istock

Australian National University expert Robert Breunig said concerns about Covid-19 had definitely hastened the use of digital payments.

Paying by credit card via mobile phone has also made transactions easier and more convenient, so you no longer need to cart a wallet.

And the move towards a cashless world also eliminated some kinds of tax avoidance, he added.

“People often avoid tax by doing cash type jobs and if there is no cash under the table, then it’ll be easier to actually follow transactions,” the director of the ANU’s tax and transfer policy institute said.

“Some people might not like that idea, but in terms of fairness of everybody paying the same amount of tax, it is an improvement.”

Professor Breunig said it was common in the US for tips to be paid via credit card but it’s unknown whether this would prompt people to tip more or less.

“My gut feeling is it probably would reduce their takings,” he said.

“The other thing is it would of course mean now when they get tips they have to declare it for tax returns, but part of the idea of bringing more transactions into the visible system is that you can actually then cut taxes.

JOB VACANCIES
Camera IconDigital transactions have been king during Covid. NCA NewsWire / Gaye Gerard Credit: News Corp Australia

“If you’re taxing a greater quantity of transactions, then you can actually reduce the taxes, so that’s one potential upside.

“I suspect people will still find ways around it by giving undeclared gifts. We also have fringe benefits tax for that reason ... we know people can still get around these things with undeclared gifts.”

But for the busker on the street, there’s potentially a problem, Professor Breunig notes.

“People can be paid in kind — you can give them a gift instead of cash or perhaps people will innovate and have a little iPad where you scan your credit card to give them money,” he said.

“Or maybe instead we could have a system where buskers register with the council and people can donate money through the council and then money gets distributed to the buskers.”

Busker pay
Camera IconFor many buskers, the physical hat has been replaced by a digital one. Alex Coppel Credit: News Corp Australia

RMIT senior economics lecturer Meg Elkins has researched data from online platform The Busking Project, looking at payments to more than 3500 buskers from 121 countries including Australia in the lead up to and after the pandemic was declared on March 11 last year.

Dr Elkins said there had been an “exponential rise” in cashless donations to buskers from that date.

“Buskers for centuries have been performing for coin. But people aren’t carrying cash anymore so they’ve actually had to change their tactics really quickly,” she said.

“It’s that idea of the physical hat - now we’ve got the digital hat.

“What we’ve noticed is an uptick - 30 times over - what it was pre-Covid announcement ... and it’s just rising exponentially.

“It’s fascinating to see how much it’s risen in such a short period of time.

“It’s a very good example of what was very much a domain of coin only or note only and an accelerated movement towards that cashless payment.”

Dr Elkins believes people are more likely to tip digitally now because they have become used to the process of tapping for QR codes.

Some buskers were also accepting “next level” donations in the form of bitcoin and cryptocurrency, she added.

She said it was hard to know whether people were partly donating to support performers during harsher times because they were unable to perform as usual.

But there was potential to increase earnings by offering digital donations - which often include a default option - as well as by cash in a hat.

“Buskers are actually finding they’re getting more money through these default payments,” she said.

“People are lazy by nature so they tend to take the default option a busker has of a suggested donation.”

However, the “beautiful” exchange a member of the public has with a performer after dropping a note into the hat could be lost.

“There’s a moment where you hand over the money and look them in the eye and get something back. If it’s only just the tap and go you lose that moment of exchange as well - that very primal element that again has been around for centuries.”

Originally published as Australia to be completely cashless in a decade, experts predict, according to survey

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