Australians Put Their Trust in Cash
Despite the rise of digital payments and a decrease in face-to-face transactions, demand for cash in Australia is surging. A recent paper from the Reserve Bank of Australia (RBA) reports consumers are withdrawing large amounts from ATMs, driven by the reliability of physical money as a store of wealth and an emergency payment option.
According to the paper—Review of Banknotes Distribution Arrangements—$100 billion worth of banknotes changed hands this October, representing double the amount moving in the same period back in 2010. Since the beginning of the pandemic, the value of notes in circulation has risen by around 20 percent, compared with a typical annual increase of six percent in the prior decade.
Cash is expected to remain an important means of payments into the future, particularly as some parts of the community rely heavily on cash in their daily lives.
While the overall share of cash-based transactions is declining, the paper indicates cash remains a vital payment choice for around 15 percent of the population, citing a 2020 study that found this group uses cash for at least 80 percent of their in-person purchases. The majority of these high cash users felt they would suffer ‘major inconvenience or genuine hardship’ if they could no longer withdraw or spend cash.
Exploring the reasons why people chose to use cash, the study found its privacy, wide acceptance and convenience for budgeting to be the main drivers. Its reliability as a payment method when cashless options fail—such as during power or internet outages—is also a popular reason to keep a store of it to hand.
Cash is also important as a back-up for electronic payment methods and as a store of wealth.
The RBA notes that the store-of-wealth function offered by cash is especially significant during times of economic uncertainty, with demand often surging at times of economic stress. High denomination notes are the most popular during such periods, due to their convenience when storing large amounts. Demand for large banknotes is currently at its highest point in over a decade.