The death of cash. Makes for great headlines. But is there substance to the statement? At RFi Group we have been asking customers about their attitudes towards cash for several years now; both in Australia and across global markets. With the upcoming changes to surcharging regulation, the New Payments Platform (NPP) and advent of new payments technology, things could change rapidly. But for the moment the hard data suggests we are still some way off, with most consumers in Australia still seeing a place for cash in their wallets, particularly for low value purchases.
The general trend was emerging markets had a higher percentage of customers agreeing they could imagine a cashless society.
When we asked consumers across 16 markets whether they could imagine a cashless society there were some stark differences. The general trend was emerging markets had a higher percentage of customers agreeing they could imagine a cashless society. For developed markets like Australia the figure was only around a third. Despite the proliferation of credit cards, contactless technology, widespread acceptance of electronic payments by merchants and recently the advent of mobile payments/in app purchases/online spending, most customers still see a place for cash.
Digging deeper into Australian consumer perspectives, suggests that cash is primarily used for low value purchases (transactions under $100). The 2016 RFi Group Payments diary, a study which records every single transaction made by over 1,000 consumers over a seven-day period, indicates cash still accounts for 40% of transaction volumes, but only 15% of the value. Furthermore, within the low value transaction space cash accounts for 43% of volume and 30% of the value.
Reaffirming below, even consumer preferences within a low value payment context are skewed towards cash – 60% of Australian consumers indicated cash was their preferred means of payment for low value transactions. This contrasts with just 1 in 5 preferring cash at supermarkets and when paying for petrol. The differences in preferences across contexts are telling of the barriers at play – chiefly surcharges and minimum spend limits.
RFi Australian merchant data indicates a quarter of SMEs (<$10m revenue)* still prefer to accept cash payments over other forms, while over 40% impose minimum spend limits. These figures are even higher for the hospitality sectors (restaurants, cafes, bars etc.). Further a quarter of merchants indicated they had lost customers due to not accepting certain payment forms. While on the consumer side, over half had not completed a purchase due to a surcharge.
RFi Australian merchant data indicates a quarter of SMEs still prefer to accept cash payments over other forms, while over 40% impose minimum spend limits.
So, cost is the central barrier preventing the use of electronic payments, especially in a low value purchase context. Upcoming surcharge regulation is likely to mitigate this. Combined with the advent of the NPP, improvements in mobile payments technology, and the simplification of recurring/card on file/in app payments should provide the impetus for a further decline in cash usage.
However, a base level of demand for cash is likely to remain for some time. There are behavioural/attitudinal barriers at play, with a subset of consumers preferring cash due to security, convenience and privacy reasons (non-trackable); the underground economy still accounts for a notable proportion of cash holdings in Australia. As long as cash remains costless and anonymous, there will be demand for it.
*Note the RFi Group merchant data is not representative of the Australian SME market, but accounts for a wide range of merchants across revenue bands