One of the biggest debates in the banking sector over the last couple of years has been about the decline in cash, with some commentators starting to speculate that it’s a case of when, rather than if, society will eventually become cashless.
Those who advocate for this can point to some recent figures from Australia that seem to back up the notion that the use of cash is falling. But while it may be true that alternative payment methods are gaining acceptance around the world, the idea that cash is in danger of going extinct in places like Australia is a long way from the truth.
ATM market in Australia to remain positive
As of the end of 2016, there were some 31,550 ATMs installed in Australia, and figures from Retail Banking Research suggest the market will support around 4,000 market shipments a year. Of these, around three-quarters will be off-site and the majority will be replacement for older hardware. This indicates that banks still recognize the value of a strong cash distribution network and are keen to upgrade their offerings in order to take advantage of new functionality. Financial inclusion and the right for consumers to choose how they pay for goods and services remain of importance also.
By 2021, there are expected to be some 575 million ATM withdrawals in Australia, with each ATM expected to process 1,600 transactions per month. In 2015, a total of $106 billion was withdrawn from ATMs – working out to over $12 million every hour. Hardly a crisis for cash.
Regal Funds Management bank analyst Omkar Joshi also noted that it is unlikely that Australia will experience any great drop in the number of ATMs or bank branches, as there’s still widespread demand from consumers for these solutions.
“You would not want to be the first bank to scrap [ATMs] and have customers at your store protesting,” he told the Sydney Morning Herald.
Instead, we can expect cash to retain its place for many years to come, albeit as just one of a wider range of payment methods that will be used as consumers embrace choice and select whatever method is most convenient for them in any given situation. This will undoubtedly include cash, so any suggestions that this payment method is dying in Australia – or anywhere else – are wide of the mark.
Cash declines, but doesn’t disappear
Figures released by the Reserve Bank of Australia (RBA) show that the number of cash withdrawals made from ATMs in the country in January this year dropped by 7.7 percent compared with the same period in 2016. At the same time, the total value of withdrawals fell by 3.9 percent.
This marked a drop in the country for ATM withdrawals, and comes as the RBA prepares to roll out a new real-time payments platform later this year that aims to simplify digital payments and allow consumers and businesses to transfer funds much faster than at present.
But while cash may no longer be the dominant payment force in payments that it once was, it is highly unlikely to disappear from our wallets altogether any time soon. Indeed, the volume of cash being withdrawn still remains incredibly high in Australia.