Cashless retail

In 2016 coffee roaster Pablo & Rusty’s opened a new location in Brisbane, one of several in their network.1 The significance of the store however, was its payment format- the location was entirely cashless, only accepting payments via card, phone-based apps, or their own range of NFC equipped smart coffee cups. As Australia’s first cashless café, it offers a glimpse at what appears to be an inevitable future. The majority of transactions by Australian consumers are made electronically, with cash only being used in 37% of purchases as of 2016.2 While still a far cry behind the world’s cashless leader, that honour going to Sweden with 2% cash purchases,3 the overarching decline of physical cash is clear.

In a speech at the 2018 Australian Payment Summit, the RBA stated an expectation that Australia would become a near-cashless society as electronic payment technologies become more convenient and widespread.4 Policy has reflected this expectation too. Since September 2017, the ACC has enacted regulations around ‘excessive’ surcharges for EFTPOS payments collected by businesses, limiting it to the actual cost of acceptance for the business.5 There are also plans to place a $10,000 limit on cash purchases in July of 2019.6 Framed as simultaneously a strategic move against tax evasion and encouraging at transition to a digital society, any purchase over that limit would have to be made by cheque or a credit/debit card.

A case for going cashless

For retailers, going cashless brings several operational advantages. No cash means no time spent balancing a till, managing a float, or taking time out of the day to make deposits at a bank. And with no cash on premises, risk of theft and other security concerns are reduced, potentially flowing on to lower insurance costs for a store.

But a cashless society isn't without its costs

Concerns have been raised over the impact that a shift to cashless transactions would have on particularly vulnerable groups. The unbanked, adults who do not have hold a bank account, are one such group that would be adversely affected by a decline in cash acceptance. Based on the most recent World Bank data,7 an estimated 1.1% of Australians are unbanked, equating to roughly 195,000 individuals who would find themselves struggling to navigate a cashless society. The elderly, who often face difficulties in adapting to new technology, are another population at risk of being locked out by electronic payments as can already be seen in China.8 These concerns have already resulted in pre-emptive policy in Philadelphia and New Jersey in the United States, making cash acceptance a legal requirement for retailers.9

While the benefits of cashless payments for retailers are clear, with its prevalence in Australia making it practically a prerequisite for businesses here, a cashless society hasn’t quite been realised. Although its arrival is anticipated by government organisations, its effect on vulnerable groups must first be resolved.

  1. Williams, H. (2016). Source.
  2. Doyle, M., Fisher, C., Tellez, E. & Yadav, A. (2017). How Australians Pay: Evidence from the 2016 Consumer Payments Survey (Research Discussion Paper – RDP 2017-04). Retrieved from RBA.
  3. Glance, D. (2017). Source.
  4. Lowe, P. (2018). A Journey Towards a Near Cashless Payments System (Speech). Retrieved from RBA.
  5. Australian Competition & Consumer Commission. (2017). Source.
  6. Novak, M. (2018). Source.
  7. The World Bank. (2017). The Global Findex Database 2017. Retrieved from The World Bank.
  8. Mullin, K. (2018). Source.
  9. Worthington, S. (2019). Source.