Heather Lewis has an unusual budgeting method in the age of online banking, but it works for her.
When the disability support pensioner gets paid, she heads to her local bank branch in Melbourne, withdraws the cash and places it into plastic pockets according to each bill or expense.
“My whole world revolves around cash,” says Lewis, who has a learning disability and says she would struggle to budget if she didn’t have physical money.
“When you’re on a pension every dollar needs to be accounted for.”
Future access to physical cash is now under a cloud, according to Australia’s primary cash transit company, amid a sharp decline in the use of notes and coins.
The Linfox-owned Armaguard has warned that its distribution operations are unsustainable due to falling demand, sparking emergency meetings with Australia’s major banks. The Reserve Bank, which prints and issues currency, is also involved in the discussions.
The concern is that if Armaguard, which has a near monopoly over physical cash distribution in Australia, were to reduce or cease deliveries, there would be an immediate shortage.
This would impact its major clients, including banks, post offices, supermarkets and other major retailers, which would curtail the availability of cash for the community.
Lewis says she has already been struggling with businesses phasing out cash. Lewis and her mother bake cakes that have been regularly displayed at the Royal Melbourne Show. But Lewis hasn’t attendedsince the Covid pandemic began, when the show changed to purely online ticket sales with no cash option.
“It does make you feel a bit isolated,” she says.
The volume of banknotes in circulation remains high in Australia, as they are widely used as a store of wealth.
But actual cash usage has dropped to just 13% of transactions, according to professional services firm Accenture, down from 27% before the pandemic.
The decline in cash usage has been swift. Just a decade ago, about half of all transactions were cash-based.
Armaguard had expected cash usage to rebound after Covid-19 lockdowns eased, but the anticipated recovery failed to materialise. Instead, many consumers and some businesses just stopped using physical currency altogether.
“The pandemic truly accelerated the e-commerce side of the equation,” Ryan McQueen, the payments and open data lead at Accenture, says.
“It wasn’t just about buying online, but also ordering ahead.”
The shift makes it less profitable for cash transit companies to continue operations, especially outside major cities.
This has prompted the competition regulator to allow banks to engage in emergency talks with Armaguard on a solution. If it weren’t for the Australian Competition and Consumer Commission authorisation, the collective negotiations would breach competition rules, such is the seriousness of the situation.
The ACCC says it will closely assess any proposed response, with a focus on making sure there is cash in remote and regional areas where bank branches are limited and people often access money through other sources such as Australia Post and retailers.
It’s possible the groups will ask for government support to continue cash deliveries.
Early adopters
Australians are early adopters of payments technology and among the least likely in the world to transact in cash, alongside those in the Nordic countries.
A recent inquiry in Sweden, the country closest to becoming cashless, found that the state needed to assume a greater responsibility for everyone being able to make cash payments.
Prof Steve Worthington,of Australia’s Swinburne University of Technology, says banks have a social responsibility to make cash available.
“Banks make their money from taking in money and lending it out, so it is a responsibility they continue to keep cash available to people,” he says.
While cash usage is falling, many people still rely on notes and coins. These include many older Australians, those with limited or no internet access, people on low incomes and those with a disability, says Worthington.
“For them cash is an essential service, as is power and water. To be denied access to cash is akin to them being excluded from participating fully in the Australian economy,” he says.
“Some people just quite like to have money on hand rather than in the banking system. They know they can touch it, they can feel it, they can kiss it if they like.”
Some bank branches have already stopped handling cash, citing a significant drop in transactions. They now refer customers to their ATMs and coin deposit machines.
The investment bank Macquarie, which also offers retail services, is phasing out cash and cheque payments next year.
When Lewis, who enjoys music, wants to go to a concert or attend the Melbourne show, she puts small amounts of cash aside and cuts back on the money she dedicates to other expenses such as food, so she can afford to go.
“Doing that through a spreadsheet would be too difficult for me,” she says. “If I couldn’t get access to cash, it would make life very hard.”
