Are you ready to give up cash?

Tuesday, 19 June 2018

Some people need cash for nefarious purposes.

OPINION: I pulled out a $10 note to buy a drink for my son the other day.

The woman behind the counter looked alarmed. 'Oh. Cash!'

Cash! Indeed. For many of us, it's something that we remember as a distant part of our childhoods, back from the time when we could use a 50c piece to buy an iceblock at the dairy.

When new banknotes were introduced in 2016 it took some of my friends at least a year to even notice, so rarely do they handle the stuff.

* We should have reached 'peak cash' by now, but NZ's pile of banknotes keeps growing**

With news that non-cash payment methods for public transport are being rolled out across the country over the next eight years, it makes you wonder whether cash's time is finally up.

Cards – credit and debit – are the most popular way for New Zealanders to pay for anything. Last year, New Zealanders made 337 card transactions each in the year, and 69 electronic payments.

But at the same time, and weirdly, the amount of cash we have on hold continues to increase. Reserve Bank data shows there was $5.53 billion of notes in circulation last year, up from just under $5.5b the year before and $4.96b in 2015. Only the number of $100 notes in circulation is dropping.

The amount of physical money in circulation works out to a bit over $1200 in cash per person.

So what's it going to take for New Zealanders to finally realise, in a world where we can make a payment via Apple Watch, load our smartphones with our credit card details and LayBuy our way through our Christmas shopping, that we can really leave cash in the past?

TIME

Young people are growing up in a world without cash.

Kids are offered a cashless moneybox to give them an early grasp on finance, and many get their pocket money via online transfer, accessed with an eftpos card. There is nothing daunting about the idea of paying via smartphone.

Cheques are as foreign a concept as getting weekly pay in an envelope.

When was the last time you handled cash?

But as these younger generations dominate commerce, on both sides of the transaction, it will become less and less common to deal in physical money.

'Younger people generally make less use of cash, because they have grown up in a world that uses cards, whereas older people didn't have the option of cards initially,' said Claire Matthews, a banking expert at Massey University.

Data has also shown that more well-off people are more likely to pay for things electronically, by card or mobile phone.

CONVENIENCE

It's pretty easy to wave a contactless card in the direction of a terminal.

But Matthews says there are still improvements to be made, so that eventually there's no question of what's the easiest way to pay for a last-minute loaf of bread or bottle of milk.

'Payment from mobile apps or similar will offer greater convenience. Moves to make cash less convenient would also make a difference.'

RELIABILITY

There's nothing worse than getting to the counter - or processing an order online - only to find your card won't work or a power cut has taken out the point-of-sale system.

If we're going to give cash up entirely, the payment technology will have to evolve to a level where no one is worried about being caught out - or has a reliable back-up system in case.

SOMETHING FOR THE HIDDEN ECONOMY

A major part of the need for cash is that we sometimes don't want our payments to be traceable.

People pay their cleaners, babysitters, gardeners and tradespeople in cash when those people want to avoid tax.

Some people use cash to pay drug dealers and for stolen goods, again so that those payments are untraced,

To completely remove that need for cash, another anonymous way to trade currency would need to develop. Cryptocurrencies are the obvious candidate.