People are carrying less cash than ever, but RBA Governor Philip Lowe says that hard currency will always have a place in the Australian economy.
Cash now accounts for just a quarter of day-to-day transactions, with consumers increasingly favouring electronic payments.
That decline is being driven by the proliferation of “tap-and-go” systems. Around 80 per cent of point-of-sale transactions are now tap and go, which Governor Lowe attributes to the rollout of new technology in payment terminals and “the willingness of Australians to try something different”.
Mobile payments, including through wearable devices, have also seen rapid adoption by Australians.
However, while Governor Lowe believes electronic cash will always have its place in the economy.
“I feel like in the future cash is going to be the payment instrument you use if a disaster happens or there’s a failure of the electronic system,” Governor Lowe said in a speech at the Australian Payments Network Summit.
“I think most of us who use tap-and-go payments all the time still carry cash in our wallets… it would be good if they didn’t need to, if the whole system was electronic, and in the end that’s going to be the more effective solution for Australians.”
But while cash will persist, cheques are set to die out completely.
“Over the past year, the number of cheques written has fallen by another 19 per cent and the value of cheques written has fallen by more than 30 per cent, as the real estate industry has continued to shift to electronic property settlements,” Governor Lowe said.
“At some point it will be appropriate to wind up the cheque system, and that point is getting closer. Before this happens, though, it is important that alternative payment methods are available for those who rely on cheques.
“I can see the end of the cheque system, I can’t see the end of the cash system.”
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