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It’s official: Cash is dying. One graph tells the tale

Cashless transaction

You’ve probably been using cash a lot less lately. I know I have. And the RBA knows it.

While cheques might be the first to go the way of the dodo, Australians are using a heck of a lot less of the folding stuff. Which might be bad news for those who charge less for cash (either legitimately or otherwise).

Speaking (about Bitcoin in particular) recently, Tony Richards, who heads up the Reserve Bank’s Payments Policy department shared one graph that tells the tale:

Check out those purple and green lines. And the declining red dots. But the graph, clear as it is, doesn’t tell the whole story.

That decline in cash looks relatively benign. Sure, it’s falling, but not at a rate of knots, right? Well, yes, but those numbers are in actual dollars. Meaning that while the use of cash continues to decline in ‘dollars spent’, the fall in cash as a proportion of total transactions is falling even faster. Much faster.

Just eyeball that chart again. Debit and credit cards have roughly tripled since 2006. Direct debit and credit payments have probably doubled. And the use of cash has fallen by around a third.

Does anyone really think that cash won’t be the third — perhaps a distant third — most used payment method in the next 5 years?

That’s not great news for the armoured car industry. Or the odd tradie who’ll do you a better deal if you pay by cash and don’t need an invoice. And it’ll likely mean ATMs (and, I’d wager, bank branches) become fewer and harder to find.

It’ll also likely make things easier for the new wave of digital-only banks and payment processors. Yes, the newly announced 86 400 (yep, really… that’s what they’re calling it) and overseas raiders will find it much easier to compete with our largest banks when they don’t have to worry about cash.

To be fair, Commonwealth Bank of Australia (ASX: CBA) is very innovative (by world standards) when it comes to technology. And Australia and New Zealand Banking Group (ASX: ANZ) deserves kudos for being the first of the Big 4 (plus American Express and most Credit Unions) to accept Apple Pay and Google Pay when they were launched. National Australia Bank Ltd. (ASX: NAB) and Westpac Banking Corp (ASX: WBC) probably need to take some leaves from those books.

And none of them can afford to be flat-footed, lest they join cheques — and soon enough, cash — in the history books.

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