Plunging cash use is affecting the whole payment system, RBA governor warns
A sharp decline in the number of people using cash is putting pressure on the entire payment system and could lead to people needing to travel further to access ATMs and bank branches, Reserve Bank Governor Michele Bullock has warned.
Speaking in Sydney this morning at the Australian Payments Network Summit, Bullock said the Reserve Bank remained focused on maintaining access to cash despite the difficulties that lay ahead.
“The challenge we face is that as the transactional use of cash declines, it is affecting the economics of providing cash services and putting pressure on the cash distribution system,” she said.
According to the latest RBA data, the share of consumer payments made using cash plunged from 70 per cent in 2007 to 13 per cent in 2022.
Despite the large majority of Australians now using digital and card transactions over cash, it remained an important payment method for some people and well as a precautionary store of wealth for others, Bullock said.
“Cash is also an important backup method of payment during system outages or natural disasters, when electronic payments might be unavailable,” Bullock said.
Earlier this year, the Australian Competition and Consumer Commission (ACCC) gave its approval for the merger of the country’s two largest cash transit companies – Armaguard and Prosegur.
However, even with the merger, the company was now saying its business was unsustainable, Bullock said.
The declining use of cash was also challenging the provision of retail cash services, which was evident in the significant reduction in the number of cash access points over recent years, including ATMs and bank branches.
“Despite this, the distance people need to travel to access cash services has been little changed in recent years,” Bullock said.
“But this may not be the case in the future if access points continue to decline.”
The issue of maintaining cash as a payment method has gained traction with the public over recent years, particularly on social media, with consumers naming and shaming businesses that have stopped accepting cash.
A Nine.com.au poll earlier this month found an overwhelming majority of Australians believe businesses should be forced to legally accept cash.
Out of 554 respondents, 78 per cent believe businesses should be forced to take cash payments.
Australia was looking closely at how other countries around the world were dealing with declining cash use and considering a range of policy and legislative responses, Bullock said.
One possibility was to create a single cooperative entity formed from a number of organisations to carry out cash distribution services, she said.
