16-Aug-2021 • Personal Finance
More than a third (35%) of Australians would be happy to go cashless by 2022 and a quarter (25%) typically hold small amounts of unspent cash in their wallets for between one and three months, according to new research by ME.
According to the findings, which resulted from a ME survey of 1,000 adults on their attitudes to a cashless economy, millennial Australians aged 25 to 39 years of age are the most responsive (45%) to the potential shift to a cashless economy, followed by Gen Zs aged 18 to 24 (40%).
ME’s Head of Home Loans and Personal Banking, Claudio Mazzarella, said the findings, along with branch closures and the removal of some 6,500 ATMs since 2016 * reflect the changing attitudes and preferences towards money.
“It’s no shock that Australians, particularly the younger generations, are using less cash, but it’s surprising that one third would be willing to make the change as soon as next year,” he said.
“A trend likely accelerated by the COVID-19 pandemic, over one third of Australians now only use cash ‘from time to time’ and ‘on the odd occasion’ respectively. And it seems the decline in cash will only continue, with digital convenience clearly king when it comes to payment methods for Australians.”
ME’s research revealed Australians’ top reasons for not carrying cash were:
- Inconvenient to go and withdraw cash (50%).
- Don’t like carrying around a wallet, it’s just an extra item to carry (22%).
- Worried about losing it (21%).
- A lot of businesses don’t accept it as payment anymore (19%).
- It’s unhygienic (17%) - with this number jumping in Victoria (24%) compared to other states such as WA (8%).
Digital wallets still lag behind physical debit and credit cards
Despite the rapid decline in cash payments, the preference to use digital wallets on smartphones and watches remains significantly lower (12%) compared to the most preferred method, debit or credit cards at 63%.
“Surprisingly, it seems the use of less traditional payment methods such as digital wallets and Buy Now Pay Later apps still have a way to go in terms of adoption by most consumers as a preferred way to pay for goods and services. We expect to see this number grow significantly over the next few years as an increasing number of banks, including ME, finalise their digital wallet capabilities.
“As a digital bank, ME is always looking at ways to make banking more convenient for our customers. With the recent introduction of ‘instant card issuance’ – adding a new debit card to your digital wallet in around five minutes – there is no longer a need to wait days for the physical card to arrive at your door, when you open a new everyday transaction account,” said Mr Mazzarella.
Imagining a cashless future
According to ME’s research, the most common items Australians use cash for are purchases under $10 (61%), donations (47%) and takeaway coffee or tea (46%).
But what would they miss most if Australia moved to a cashless economy? 21% said ‘giving money as a present’, closely followed by ‘educating children on money’ (19%).
“A cashless Australia would mean gold coin donations for dress up days at school fundraisers and change under pillows from the tooth fairy would become a thing of the past. Australians will have to rethink how we tackle some of these everyday life moments, like pocket money for kids, in a digital way,” said Mr Mazzarella.
“When it comes to educating children about money, it’s important to start the conversations young and begin incorporating real life digital finance examples – that may be explaining how a bank account works or ‘playing shop’ to understand digital transactions.”
*https://www.rba.gov.au/publications/bulletin/2021/jun/how-far-do-australians-need-to-travel-to-access-cash.html
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Editor notes: ME’s Cashless Economy Survey is based on national survey of 1,000 Australian adults. The survey was conducted in June 2021 with fieldwork by Pure Profile.