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Making Change Going Cashless

With the rise in banking apps and online and contactless payment options, Australia is moving towards a cashless economy. Are you embracing change?


Late last year, Citibank became the first Australian bank to announce that some of its branches would no longer deal in cash. Instead, the bank announced it would focus on digital banking – the channel it says its customers prefer to use.

Reserve Bank of Australia figures reveal that ATM withdrawals are at a 15-year low. The drop in cash withdrawals is being put down to the increasing popularity of online banking, contactless payment options like PayPass and payWave, and smartphone payment systems. But are Australians ready to surrender their notes and coins in favour of a digital system?

The case for change

In 2015, Westpac released the Cash Free Report. It found that over half (53 per cent) of payments in Australia were cashless.

“We are certainly moving towards a cashless economy,” Dr David Glance, Director of the UWA Centre for Software Practice, says. “Australia is pretty advanced in terms of having shops accepting electronic payments.

“The main benefit of not having to deal with cash is not having to go to the ATM and not having to worry about running out or not having enough money.”

It’s not just card payments that are leading the digital revolution. Smartphone payment options like Apple Pay and Android Pay are allowing an increasing number of Australians to make contactless payments quickly and easily.

But Paul Versteege, Policy Coordinator for the Combined Pensioners and Superannuants Association of NSW, says the costs associated with digital banking can be prohibitive, particularly for older Australians.

“There are many benefits to going cashless. I can remember standing in line at banks; I wasted a lot of hours of my life there,” he says. “But the equipment needed to bank online can be quite expensive. If you are on a low income in your retirement that can be a serious barrier to participating.”

What’s in it for you?

All the major banks have an online banking option, which you can set up in a branch or on the phone. Online banking and banking apps allow you to transfer money and pay bills at home or on the go.  

Contactless payment methods allow you to “tap and go”, with no need for a signature or pin on purchases under $100. Many businesses have already done away with minimum spends and surcharges on card transactions, and a reduction in the amount banks are allowed to charge for these transactions means more will likely follow suit.

“With card payments and ATM withdrawals, there is a very small risk of somebody scanning the chip and getting your details,” Glance says.

Contactless payment options actually reduce that risk – with smartphone payments going even further to improve security.

“The thing about using your phone is there is extra security built in because your card number is never given to the merchant; a substitute number is given. And it’s only activated when you put your thumb on it and your print is scanned,” Glance says.

Going cashless, getting older

Glance says that while there is always going to be nostalgia for cash, the move towards digital payments will particularly benefit older Australians.

“There is an ageing population in Australia, and more and more people are starting to suffer from dementia. Having these tools to track what you spend and where is a useful thing,” he says. “When I use my mobile to pay rather than my card, I immediately get a receipt; I know how much I’ve spent and it’s there as a record.

“Older people are also more prone to being preyed upon. Not carrying cash around is definitely a good thing from a personal security perspective.”

Paul Versteege agrees there are some security benefits to going cashless, but worries that the move away from face-to-face transactions is leaving elderly people open to scams.

“Sure, opportunistic robbers will go for cash, but at the same time when you’re doing things digitally there is a risk of becoming victim to a scam,” he says. “My advice is that if it reaches you over the internet and it looks too good to be true, check over the phone or in person before you do anything.”

The future of banking

The Reserve Bank of Australia is working with a number of organisations to introduce the New Payments Platform (NPP), which will allow you to make payments to a person or business using just their phone number, email or BSB.

“Right now if you transfer money to someone who’s not with the same bank, it can take three days for that money to become available,” Glance says.

“The NPP allows people to freely move money around. The first stage will come into affect later this year.”

Cashless Platforms at a Glance

Online banking

  • Compatible with all major banks
  • All you need is a computer and internet connection
  • Allows you to transfer money and pay bills
  • Free with most accounts
  • Doesn’t reduce the amount of cash you need to carry for everyday purchases

Contactless cards

  • Compatible with all major banks
  • Reduces the risk of “card skimming” (where people steal your information using the chip on your credit card)
  • Quick and easy for paymentsunder $100
  • Reduces the amount of cash you need to carry
  • May incur a charge with some merchants

Smartphone payments

  • Reduces the risk of your information being stolen
  • Quick and easy
  • Increased security through fingerprint identification
  • Reduces the amount of cash you need to carry
  • Produces an instant, e-receipt
  • Not yet compatible with all banks