Experts predict 'cashless' Australia likely by 2026, seniors among most affected
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Tap-and-go payments using your phone or smartwatch could soon be the only way you pay for anything as Australia accelerates towards becoming a completely cashless society.
Finance experts predict the country is just three years away from eliminating cash transactions as the government unveils new legislation to regulate digital payments.
However, the transition doesn't come without controversy.
Proponents argue going cashless increases convenience, makes transactions more traceable for security, and reduces banking costs.
But critics counter that it compromises privacy, excludes groups like seniors and other vulnerable groups, and loses the psychological benefits of paying with physical cash.
In Australia, the shift from cash rapidly sped up during the COVID-19 pandemic, when hygiene concerns made people favour contactless tap-and-go payments over exchanging banknotes.
RBA figures show that in 2019, cash was used in 32 per cent of in-person transactions. But by 2021, this plummeted to just 16 per cent of transactions, an enormous drop in only two years.
Meanwhile, mobile wallet usage skyrocketed almost overnight through applications like Apple Pay and Google Pay.
Now, a quarter of non-cash payments happen via mobile wallets.
This is transforming the way Australians pay. A case in point—gone are the days of rummaging through your wallet or purse for the right card. For more and more Aussies, a simple tap of a phone or smartwatch pays for your morning cuppa in seconds.
But consumer advocates caution that convenience comes at a cost. According to finance expert Nicole Pedersen-McKinnon, paying with a card or phone disconnects you from the 'pain' of parting with your money.
'There is a psychological phenomenon called coupling, which means linking your purchases with payment pain,' she explained, adding that this coupling is weaker when money is digitised rather than physical.
'Cash does this as the dollar detriment is immediate and in your face, so to speak.'
This means that ditching cash likely means higher consumer spending, less restraint, and more splurging, which spells trouble for vulnerable groups already struggling with money management.
Another question comes to mind when it comes to 'cashless' purchases: What if your phone runs out of battery while you're out? Or mobile networks crash from a cyber attack? No cash means no backup option.
These concerns arose after the Australian government announced legislation to regulate digital payments for the first time.
The new laws will give the Reserve Bank oversight of technology companies like Apple and Google and their digital wallet systems.
According to finance expert Sarah Wells, the laws are the next step towards Australia eliminating cash completely within three years. She said the government’s recent move to tighten the grip on digital cash payments like Google Pay and Apple Pay is the ‘next step towards a cash-starved’ country.
However, Wells warned the government must consider privacy, security and accessibility for all groups in society, not just the tech-savvy.
'We need to make sure we are not compromising the safety, education and experience of minority groups and young minds in our endeavours to legislate contemporary payment platforms,' Wells said.
Human rights groups also fear invasive tracking of all purchases by tech giants, loss of financial anonymity, and exclusion of vulnerable community members without smartphones.
So, while a fully cashless future offers some benefits, the risks are real, too. Imagine the chaos if an outage brought the tap-and-go system crashing down across the country with no cash backup…
Perhaps digital payments could be Australia's future. But is it the future we want or need? Members, let us know your thoughts in the comments below!
Finance experts predict the country is just three years away from eliminating cash transactions as the government unveils new legislation to regulate digital payments.
However, the transition doesn't come without controversy.
Proponents argue going cashless increases convenience, makes transactions more traceable for security, and reduces banking costs.
But critics counter that it compromises privacy, excludes groups like seniors and other vulnerable groups, and loses the psychological benefits of paying with physical cash.
Australia could go cashless within three years as the government moves to regulate digital wallets. Credit: Pexels.
In Australia, the shift from cash rapidly sped up during the COVID-19 pandemic, when hygiene concerns made people favour contactless tap-and-go payments over exchanging banknotes.
RBA figures show that in 2019, cash was used in 32 per cent of in-person transactions. But by 2021, this plummeted to just 16 per cent of transactions, an enormous drop in only two years.
Meanwhile, mobile wallet usage skyrocketed almost overnight through applications like Apple Pay and Google Pay.
Now, a quarter of non-cash payments happen via mobile wallets.
This is transforming the way Australians pay. A case in point—gone are the days of rummaging through your wallet or purse for the right card. For more and more Aussies, a simple tap of a phone or smartwatch pays for your morning cuppa in seconds.
But consumer advocates caution that convenience comes at a cost. According to finance expert Nicole Pedersen-McKinnon, paying with a card or phone disconnects you from the 'pain' of parting with your money.
'There is a psychological phenomenon called coupling, which means linking your purchases with payment pain,' she explained, adding that this coupling is weaker when money is digitised rather than physical.
'Cash does this as the dollar detriment is immediate and in your face, so to speak.'
This means that ditching cash likely means higher consumer spending, less restraint, and more splurging, which spells trouble for vulnerable groups already struggling with money management.
Another question comes to mind when it comes to 'cashless' purchases: What if your phone runs out of battery while you're out? Or mobile networks crash from a cyber attack? No cash means no backup option.
These concerns arose after the Australian government announced legislation to regulate digital payments for the first time.
The new laws will give the Reserve Bank oversight of technology companies like Apple and Google and their digital wallet systems.
According to finance expert Sarah Wells, the laws are the next step towards Australia eliminating cash completely within three years. She said the government’s recent move to tighten the grip on digital cash payments like Google Pay and Apple Pay is the ‘next step towards a cash-starved’ country.
However, Wells warned the government must consider privacy, security and accessibility for all groups in society, not just the tech-savvy.
'We need to make sure we are not compromising the safety, education and experience of minority groups and young minds in our endeavours to legislate contemporary payment platforms,' Wells said.
Human rights groups also fear invasive tracking of all purchases by tech giants, loss of financial anonymity, and exclusion of vulnerable community members without smartphones.
So, while a fully cashless future offers some benefits, the risks are real, too. Imagine the chaos if an outage brought the tap-and-go system crashing down across the country with no cash backup…
Perhaps digital payments could be Australia's future. But is it the future we want or need? Members, let us know your thoughts in the comments below!
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