The recent global CrowdStrike outage has sparked a fiery debate about the future of cash in Australia. With the digital world showing its vulnerabilities, the incident has thrown a wrench into the gears of those advocating for a cashless society. The outage, which occurred on July 19, affected banks, airlines, supermarkets, media organizations, and retailers, leaving many Australians stranded without the ability to make digital transactions.

The disruption was more than just an inconvenience; it was a stark reminder of the fragility of our interconnected IT systems. Professor Steve Worthington, an expert in electronic payment systems from Swinburne University, described the event as a significant wake-up call. 'We've seen outages before, but nothing on this scale,' he said. 'It's a clear sign that cash still needs to play a role in our economy as a reliable backup when technology fails us.'

CrowdStrike’s software update caused a global outage, disrupting Australian sectors and raising concerns about going cashless. Credit: Shutterstock

The Reserve Bank of Australia's Governor, Michele Bullock, had previously expressed concerns about the declining use of cash and its impact on the ATM network and the logistics of moving physical money. However, the CrowdStrike outage has underscored the importance of maintaining cash as a viable payment option, despite its decreasing popularity and the financial struggles of cash transport companies like Armaguard.

'Cash can't crash,' Prof Worthington remarked, emphasizing the inherent stability of physical currency in a world where digital systems can falter. 'It may not be king anymore, but it's certainly still part of the royal family of payments.'

The push towards a cashless society has been gaining momentum, with RMIT University finance academic Angel Zhong predicting that Australia could become functionally cashless by 2030, with digital payments accounting for over 90% of all transactions. This forecast aligns with consumer preference data from the RBA, which shows a significant decline in cash usage from 69% in 2007 to just 13% in 2022.

Despite these trends, the CrowdStrike outage, following closely on the heels of the 2023 Optus outage, has highlighted the risks associated with a fully digital economy. Dr. Zhong believes that such incidents will inevitably shake consumer confidence in digital payments and slow down the transition to a cashless society.

The federal government's announcement in June 2023 to phase out bank cheques by 2030 further illustrates the challenges of moving away from traditional payment methods. Prof Worthington suggests that the resistance to abandoning cheques indicates how difficult it would be for Australia to eliminate cash entirely, a change he believes is still many decades away.

In light of the recent outages, Dr. Zhong urges financial institutions to adopt a more proactive approach to risk management, enhancing the resilience of their systems. However, Micheal Axelsen, a lecturer in business information systems at the University of Queensland, cautions that there is no perfect solution to eliminate risk entirely. The reliance on centralized software for efficiency has made companies dependent on third-party services like CrowdStrike, which can lead to unforeseen problems.

The CrowdStrike incident serves as a reminder that while digital advancements offer convenience and efficiency, they also come with new risks. As we navigate the complexities of a changing financial landscape, it's clear that cash still has a crucial role to play. It's the sturdy lifeboat that remains afloat even when the digital tide goes out.

Key Takeaways

• A global outage triggered by cyber security firm CrowdStrike's software update disrupted various sectors in Australia, casting doubt on the country's readiness to become a cashless society.
• The incident highlighted the importance of maintaining cash as a back-up payment option, with electronic payment systems considered vulnerable.
• Dr. Angel Zhong from RMIT University suggests that despite the setbacks caused by digital vulnerabilities, Australia could become functionally cashless by 2030, with digital payments constituting over 90% of all transactions.
• Experts stress the need for proactive risk management in financial institutions and acknowledge that while risks can be reduced, they cannot be entirely eliminated, underscoring the challenges of transitioning to a fully cashless society.

So, dear readers, what are your thoughts on the matter? Have you experienced any difficulties during digital outages? Do you think Australia should maintain a balance between cash and digital payments, or are you ready to embrace a fully cashless society? Share your experiences and opinions in the comments below – we'd love to hear from you!

 

[Dee3141]

Any of us who have spent a lifetime in the IT industry have known for decades how fragile are the systems on which we are so dependent, and well before the internet came along, which has only increased the risk.
As for the impact on cash, regardless of systems there will be a need for cash into the foresee able future. How do you pay your cleaner? With cash. Economists tell us that in most countries the black economy, meaning illegal cash transactions, is 10%, or in Australia nearly $200 billion.
When I say illegal I don't mean paying cash for various services but the recipient not then declaring it for tax purposes is illegal. You'd be brave government to disrupt $200 billion of transactions by cutting out cash.

 

[Emwick]

I agree with keeping cash as a vital part of life and the economy. Despite the "convenience" of just tapping with your card or mobile phone, a general power blackout or your bank's digital system crashing down may occur at any moment. at any moment. I have witnessed and experienced this happening at the supermarket checkout a number of times. This causes anxiety and helplessness for the person checking out, and results in delays for those in the queue behind him/her.

We are subjected to an ever-growing army of scammers online because of our over-reliance on electronic devices. Hardly a day passes without this Seniors' Discount Newsletter reporting the scary and soul-destroying experiences of scammed victims.

The very poor do not have bank accounts. When you meet a beggar on the street, you can't ask him to bring out an electronic device for you to tap on. Being paid in cash is vital for those working at small and unstable jobs like cleaning, weeding, gardening, laundry and ironing,

Finally, without the physical experience of handling bills and coins, how can we effectively teach our children and teenagers to count, subtract, budget, save and use money wisely?

Emwick
Perth

 

[BellaB18]

We really need to keep cash. Not everyone has gone digital. I have a dear 87 year old friend who has no cards at all everything is cash for this dear person. Poor darling is terrified of a cashless society and l am sure they are not the only one.
Kind regards to all Vicki

 

[darrellh]

There is no doubt there is always going to be a place for cash and it should not have taken the Crowdstrke catastrophe to convince most people. Systems have been going down with reasonable regularity now and cash is the only method of payment that works. Common sense should now be having most if not all carrying cadh for such a time. I am also sure there are some slow learners as well

 

[Ezzy]

I will keep cash in my wallet & pay with cash for as long as l have a breath in my body.
Some retailers look at me in awe when l hand over cash for a transaction. On one spend when handing over a $50 note l said, 'l bet you don't see this too often'. No answer was his stern reply.