Is Australian Cash an Endangered Species? By James Reed
Thank God for the overseas media, so we can learn what is going on in Australia. Take cash for example:
“The Wuhan coronavirus (COVID-19) crisis in Australia has caused the closure of thousands of ATMs and hundreds of bank branches in the country. At least 2,150 terminals have been removed in the recent June quarter alone. This has brought the number of ATM terminals across the country to just 25,720 – their lowest level in 12 years – according to the Australian Payments Network. According to Tony Richards, head of payments policy at the Reserve Bank of Australia, most of the ATM closures were in metropolitan areas, in locations such as shopping centers. In addition, Australia’s “Big Four” banks – ANZ, Commonwealth, NAB and Westpac – have also shut down a combined 175 branches over the past 12 months. Of these, ANZ has the highest with 68 branches closed, followed by Commonwealth with 44. Meanwhile, Westpac and NAB have shut down 36 and 27 branches, respectively. The widespread closures have divided public opinion and, more importantly, left 2.5 million elderly Australians who don’t do online banking with no way to access their money.
Closures speeding up the move to a cashless society
Even as the closures inconvenience some of Australia’s most vulnerable, banking officials are saying that they expect the trend of moving away from cash to continue in the long-term. “Overall the bank expects the long-term downward trend in the use of cash to continue,” Richards said. Meanwhile, the Australian Banking Association’s chief executive officer, Anna Bligh, said that the nation’s banks had already been investing to move into the cashless economy. “Australia’s banks have invested heavily to keep up with the [customers’] banking preferences with technology and data now playing a key role in how banks do their business,” she said. But not everyone is happy with the move by the banks. Ian Heschke, chief advocate for National Seniors Australia, stated that many of the nation’s elderly feel more comfortable using cash amid fears of being scammed online. “Many of them are older Australians and taking away services from them is going to be extremely difficult for them,” he lamented.”
I have noticed how many shops will not take cash because cash could hold viruses. But credit cards could also hold viruses, granted that cash does circulate, but not as much as the paranoid think. And, shop people could wear gloves.
“Australians are hoarding cash but using cashless transactions more than ever thanks to the effects of the CCP virus, two new reports have found. The reports from electronic payment company Square shows that cash gave way to cards in daily transactions over the first half of the year while Australia’s central banking institution the Reserve Bank of Australia (RBA)revealed that the demand for banknotes had increased by 11 billion since February.
More Businesses Turn to Cashless
Square’s report (pdf) showed that over one in three Australian businesses— an estimated 36 percent—were effectively cashless during the lock-down peak in April, compared to seven percent pre-pandemic in January. Square defined cashless as accepting 95% or more transactions through debit or credit cards. Data analysis also showed that cash payments declined by more than half between January and April, down from 35 percent to 15 percent of all transactions. But the payments levelled out in June to 18 percent. Square also noted some variances between states and industries. The ACT saw the most substantial cash payments plummeting, from 42 percent of transactions in January to 14 percent in April. By June, 35.6 percent of businesses in the territory has turned cashless, over three times that of January at 9.8 percent. In Tasmania, Victoria, New South Wales and Queensland, cash payments also declined by more than half during the period from January to April, with the ratio of cashless businesses more than doubling to above 20 percent by June. By contrast, the Northern Territory remained the most committed to paying by cash, with cashless businesses ratio edging up only by 0.9 percent during the period from January to June, from 14.5 percent to 15.4 percent. Professor Steve Worthington from Swinburne University Business School attributed the decline in cash payments to both safety concerns and the drop in the number of available ATMs. Adding that he believed the pandemic is only accelerating the digital shift that has been gaining momentum over the recent years. “For consumers, fears over social distancing and a preference to minimise contact with physical currency are likely to be top of mind,” he told Square’s blog. “What’s more, with banks closing branches, reducing operating hours and fewer ATMs available, there’s less cash in circulation. Combining that with the fact that many businesses favour digital payments for speed and security, there’s less incentive now for any of us to carry cash.” Latest figures from the self-regulatory payments body, the Australian Payments Network shows that the number of ATMs fell from 27,870 to 25,720—a drop of 2150—during the June quarter.
Higher Demand for Cash
Despite the increase in cashless transactions, The Reserve Bank has seen a rise in demand for banknotes in recent months, mainly by individuals with substantial deposit balances. In his August 14 speech to House of Representatives Standing Committee on Economics, RBA governor Philip Lowe noted keeping extra cash was some Australian’s responses to the pandemic. “While COVID-19 has accelerated the shift to electronic payments, there has, paradoxically, also been record demand for banknotes,” he said. “Some people seem to be wanting to keep some extra money at home. The result has been that the stock of banknotes on issue has increased from $83 billion in February to $94 billion today.” The elevated demand reflects concerns over financial stability amid the pandemic-induced economic recession.”
In times like this keeping some cash on hand is wise, but better still is to have physical goods, like food and toilet paper, with money on credit/debit cards. Some doomsters plug for gold and silver to trade after the crash, but I think this is foolish, because in a without the rule of law situation, any barter town will have men who will just take your stuff at gun point, so I will not be going there unless Mad Max tags along with me. With his trusty bluey.