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No cash, no problem?

Cash use has been declining rapidly in Australia, putting broader access to cash at risk.

Discussions about a ‘cashless’ society in Australia returned to the spotlight in recent weeks as Armaguard, Australia’s largest cash-in-transit business, faces financial troubles. 

In February, Armaguard noted that without an urgent funding injection from banks, it would not be able to operate its business beyond mid-March. It has since received a $10 million package from its parent company which will keep Armaguard afloat for a limited period while negotiations with broader stakeholders continue. 

How have we gotten to this point? The biggest driver has been Australia’s accelerating shift towards non-cash payment methods (like card payments and, more recently, digital wallet payments). In 2007, cash accounted for about 70% of all payments – this fell to just 13% in 2022. While this shift has been in motion for some time, it was further accelerated by COVID-19 and the rising prevalence of e-commerce, which has likely seen the share of cash transactions fall further since 2022. 

This trend is not unique to Australia – cash use is declining worldwide. According to a recent report by Worldpay cash accounted for just 7% of in-person Australian transactions in 2023, one of the lowest cash shares across all economies. This is on par with cash use in China (which is rapidly becoming a cashless society with a focus on digital wallets and QR code payments) and Canada, but lower than comparable countries like the UK (10%) and the US (12%). 

All spending sectors and purposes have seen a sustained decline in the share of cash payments, but some more than others. The RBA’s 2022 Consumer Payments survey found that Transport, Leisure and Food, and Retail Spending fell from about 85% cash payments in 2007 to only 5%, 12% and 16% respectively in 2022. Several factors have driven this decline, including increased use of contactless card payments, the rise of ride-share services, and public transport services moving towards non-cash payment options.

Chart 1: Cash payments as a share of all payments by sector and purpose in Australia 

Source: RBA, Consumer Payments Survey 2022.

For the cash-in-transit industry, Australia’s growing preference for non-cash payment methods is dangerous. Currency transport is an industry with high fixed costs (to pay for specialised trucks, armed guards, secure processing centres and delivering to Australia’s regional and remote areas) yet income depends on the amount of cash being transported – which has been declining with falling demand. 

And while some parts of the economy may be comfortable trending towards a cashless society, the RBA have said that they remain focused on maintaining access to cash for Australians. Not only is cash an important back-up method during system outages and natural disasters where electronic payments are unavailable, cash remains an important means of payment for some households. About 7% of those surveyed by the RBA in 2022 were ‘high cash users’, and about 60% of this group noted that they would experience a major inconvenience or genuine hardship if cash was no longer available – equivalent to over 900,000 Australians. 

Potential and significant changes to the way the Australian cash-in-transit industry operates are also being floated – the UK, for example, has a highly regulated cash-in-transit sector which gives the central bank powers to set pricing. A different approach to cash in Australia is becoming increasingly more likely, and necessary. 

This newsletter was distributed on 16 April 2024. For any questions/comments on this week's newsletter, please contact our authors:

This blog was co-authored by Michelle Shi, Senior Economist at Deloitte Access Economics

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