- Cash payments across businesses have dropped during the pandemic, according to a report from Square.
- The report found that one in three businesses has turned cashless, meaning 95% or more of their transactions are made through debit or credit cards.
- While the ACT saw the biggest drop in cash payments, people in the Northern Territory are still committed to paying with cash.
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Australian businesses have experienced a spike in cashless payments during the coronavirus pandemic, according to a new report from payments company Square.
The Cashless Payments and the Pandemic in Australia report found that one in three businesses have turned cashless – accepting 95% or more transactions through debit or credit cards – in recent months.
The report looked at transactions across businesses that use Square in Australia between January and June 2020. During that time period, April saw the biggest slump in cash payments.
Colin Birney Head of Business Development at Square Australia said in a statement that as the pandemic began, health and safety concerns became paramount among business owners.
“This raised questions of how to properly conduct business and accept payments during social distancing and stay-at-home mandates,” he said. “The result has been a significant shift by many Australian businesses away from cash, although we have seen variances across industries and in different parts of the country.”
When it came to the different states and territories, the ACT had the biggest drop in cash payments. While cash accounted for 42% of sales in January, this fell to just 14% in April. In New South Wales, cash payments fell from 37% to 16%. while Queensland dropped 35% to 15%, and South Australia slumped from 40% to 17%.
The Northern Territory, however, held on the most tightly to cash, with one in five Territorians (19%) still choosing to pay with cash during the height of the first wave of the pandemic. In January, 14.3% of businesses were cashless and that only increased slightly to 15.2% in June 2020. That’s compared to the ACT, which a cashless rate of 9.8% in January which shot up to 35.6% in June.
Looking at the different sectors, charities have shifted away from cash the most, with cash donations dropping from 46% to 23%. Cash payments at cafes and restaurants have also dropped by more than half from 36% to 14%.
Professor Steve Worthington from Swinburne University Business School attributed this digital shift to both safety concerns and the drop in the number of available ATMs.
“For consumers, fears over social distancing and a preference to minimise contact with physical currency is likely to be top of mind,” he said in a statement.
“What’s more, with banks closing branches, reducing operating hours and fewer ATMs available, there’s less cash in circulation. Combining that with the fact that many businesses favour digital payments for speed and security, there’s less incentive now for any of us to carry cash.”
According to the Australian Payments Network, the number of ATMs in Australia has been declining. In June 2020, there were 25,719 ATMs, compared to 27,870 ATMs in March – a drop of 2,151 ATMs.
Some Aussies are hoarding cash, even if they’re not spending it
Square’s findings come after the Reserve Bank of Australia found a “paradoxial” rise in the demand for banknotes during the pandemic. The RBA had to ramp up cash in circulation from $83 billion to $94 billion, with Governor Philip Lowe saying at the time, “Some people seem to be wanting to keep some extra money at home.”
But while Square and Mastercard have reported a decline in cash usag, Worthington said it wouldn’t be ideal for Australia to become a fully cashless society as there are still groups of people who rely on cash, such as the elderly, people who are disabled and people in rural areas.
He added that if Australia went completely cashless, there would be a group of people who are “in a sense financially excluded” as they can’t get hold of cash or would find it difficult to use the cash they have.