A cashless future enabled by technology We may not be a cashless society by 2060, much less by 2030. But the fact is we're closer to becoming a nearly cashless society every day. The transition from a mostly cash to nearly cashless society didn't happen overnight.
Though a cashless society may eventually come, it isn't in a huge hurry. The most important step for CFIs right now is to cater to all of the transaction types that their customer demographics prefer in order to provide well-rounded services that address the needs of all customers in the meantime.
Australia is heading towards becoming a cashless society, with cash expected to make up just 10 per cent of all transactions by 2025. The prediction comes from market consultant Lance Blockley, who says the pandemic has sped up the shift to cashless payments.
Sweden, Brazil and China are among a handful of countries seeing an increasingly cashless society with the digitalization of money. Analysis suggests a general correlation between high-interest rates and less cash in circulation.
Your payment information is accessible to all the businesses that you transact with and personal data can be vulnerable to data breaches. If your account is hacked, all your savings could be stolen. Technical problems and power outages and downtime will stop your access to your money.
Current predictions point towards 2024 being the year when Australia can effectively go cashless, and Australian consumers seem to concur. In fact, 80% of Australians expect that smartphone payments will become the norm by 2022, the Westpac Cash Free Report tells us.
There are no laws limiting the amount of cash you can keep at home. This makes sense as many businesses, especially retail stores, keep large amounts of money with them merely as floating cash.
Cashless society: disadvantages
Elderly people may be less comfortable with tech and less able to make the switch from physical currency. Rural communities could also be left vulnerable, because of poor broadband and mobile connectivity. People with low income or debt tend to find cash easier to manage too.
Sweden is also one of the few countries where vendors can legally refuse to accept cash as payment. Many commentators believe Sweden will be the world's first fully-cashless society and that it could happen as soon as March 2023!
Cashless payment trends in Australia
Globally, cashless payments are expected to grow by 80% between 2020 and 2025, and triple by 2030. This growth is fastest in the Asia-Pacific region, with an expected 109% growth until 2025 alone in comparison to 2020.
Paying with cash in Australia
In general, most establishments in Australia accept cards. However, carrying some cash is a good idea in case you stumble across a place that doesn't. Either exchange US dollars at a bank or make an ATM cash withdrawal.
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Why Eliminate Cash? Cash can play a role in criminal activities such as money laundering and allow for tax evasion. Digital transactions or electronic money create an audit trail for law enforcement and financial institutions and can aid governments in economic policymaking.
There are three types of digital currency: cryptocurrency, stablecoins and CBDCs. Cryptocurrency is a form of decentralized digital currency that isn't pegged to any fiat currency. It uses cryptography to manage its ledger systems, and the market determines its value.
Enhanced security. The simplest reason for cash being outdated is that it is very easy to get lost or stolen, and if it's gone, it's really gone. Whether it gets dropped, goes through the washing machine, or is damaged, cash is very easy to lose.
Assessing the reasons why Japanese consumers prefer cash, Statista notes its security and reliability are highly valued. Over 55 percent of respondents cited concerns over personal information leakage as being a major drawback of cashless options.
China has transformed into a cashless society thanks to the e-payment apps and more than 1 billion smartphone owners. Although there are no official data, I assume that about 80 percent of the Chinese people no longer carry "enough" cash with them.
The high rate of internet usage, a supportive regulatory framework and the government's push for a cashless society – with COVID-19 as the impetus to introduce the digital yuan to replace physical bank notes – all contributed to the success of mobile payments in China.
In many ways, cash offers a level of monetary security that a cashless system cannot. Since law enforcement can track digital transactions and/or freeze bank accounts, many criminals—including drug cartels and terrorist organizations—operate in cash. It's an easy way for them to keep their money safe.
In 2007, cash was being used in 69 per cent of transactions. By 2013 it was down to 47 per cent. In 2016 it was 37 per cent. And in 2019 it was 27 per cent.
There are currently no cashless countries. This being said, there's a growing number of countries seeking to go cashless in the coming years. Let's take a look below at some of the countries that are closest to going cashless: Sweden.
Unless your bank has set a withdrawal limit of its own, you are free to take as much out of your bank account as you would like. It is, after all, your money. Here's the catch: If you withdraw $10,000 or more, it will trigger federal reporting requirements.
There is no limit to the amount of physical currency that may be brought into or taken out of Australia. However, travellers entering and departing Australia must report any currency they are carrying of $10,000 or more in Australian dollars, or the foreign currency equivalent.
If you plan to deposit a large amount of cash, it may need to be reported to the government. Banks must report cash deposits totaling more than $10,000. Business owners are also responsible for reporting large cash payments of more than $10,000 to the IRS.