"Cash does not crash": Despite mobile wallets surpassing ATMs, coins and notes remain "important."

 

As mobile wallets surpass ATM withdrawals, banks are rejoicing in a "digital banking boom," prompting a top expert to caution that the government needs to take action to protect access to cash.

According to data released by the Australian Banking Association on Thursday, payments made through mobile wallets have increased by 35% over the last 12 months, completing an 18-fold increase since 2019.

According to the survey, in-person bank branch interactions decreased by 47% in the four years between 2019 and 2023, while cash only made up 7.5% of transactions by value.

However, because the shift is occurring so quickly, experts worry that there are not enough safeguards in place to guarantee that Australians who still use cash can access it at ATMs or banks.

Steve Worthington, a professor at Swinburne University, stated that Australians who depend on currency still see it to be vital despite its decline.

He called on the federal government to heed recommendations from a recent Senate investigation that in-person banking be regarded as a necessary utility, similar to water or electricity.

According to Worthington, "cash is a crucial service for vast groups of people, especially senior individuals and people who reside in distant locations."

"The banks are closing their branches while simultaneously celebrating all of this, which is a dichotomy."

Who frequently utilizes cash?

Several studies conducted in recent years have shown that, despite the fact that Australians are using less cash, some groups of people still use real currency for daily transactions.

According to RBA statistics, over 25% of Australian customers would experience a "severe inconvenience" if they were unable to access cash.

One of the main causes of this is that a sizable section of the populace still conducts 80% of their transactions in cash, especially in rural regions and among older populations like baby boomers.

According to the Australian Research Council, 15% of people who are disadvantaged by digital inclusion for a number of reasons, including a lack of internet access, have no other choice but cash.

In rural and isolated regions, that percentage increases to almost 20%, or one in five Australians.

Continuous use of money

However, those who barely use them anymore are equally concerned about the problem of banks retreating from branches and ATMs in recent years, according to Worthington.

"Outages are rather common; either the power goes out or there are problems with the telecoms or IT systems," he said.

"Cash cannot crash."

The Reserve Bank, which is in charge of overseeing the banks in this sector, has also expressed serious concerns about the dependability of digital payment systems.

It has previously cautioned that as cash use decreases throughout the economy, the industry must increase service reliability.

However, Worthington cautioned that vulnerable groups of Australians were still being left behind during outages, highlighting the necessity for cash to be deemed a constitutionally essential service.

In May, a Senate investigation made this recommendation along with amendments that would compel banks to obtain regulatory clearance before closing any further branches.

The government is thinking about how to respond to the report's suggestions.