Moving Towards a Cashless Society: The Essential Guide to Digital Payments in Australia

Everything you need to know about the burgeoning digital payment revolution in Australia

For Australia, a cashless society – where its citizens would no longer be using banknotes for regular payments and almost all transactions would be electronic – is a dream which is now on the verge of becoming a reality. This guidebook will help you understand the optimism, as well as the reservations, surrounding cashless payments and the digital transformation of the banking system in Australia.

Cashless Australia: What the numbers say


With a substantial decline in both the number of in-person cash payments and the value of those transactions in the last decade, Australia is fast becoming a near-cashless society. According to the latest Consumer Payments Survey (CPS) by the Reserve Bank of Australia (RBA), the share of in-person transactions in Australia dropped from nearly 75 percent in 2007 to around 30 percent in 2019.

Interestingly, market analyst East & Partners forecasted in 2015 that by 2022, less than 2 percent of all transactions in Australia would be done by cash. Conservatively also, this ‘switch’ is poised to happen before 2025, since the country was making only about 20 percent of all payments by cash in 2019, as per the CPS.

The RBA survey also indicated that around the turn of the last decade, Australians went to the ATM roughly once a week, clocking around 47 withdrawals in a year. By 2019, ATM visits had dropped to only about once every three weeks, with citizens making no more than 17 cash withdrawals per year. And this downward trend has likely been bolstered significantly in 2020 with the onset of the COVID-19 pandemic.

Australia’s decreasing reliance on cash also manifests in the fact that less than 30 percent of the survey participants responded positively to holding $100 or more in their wallets for emergencies. High ATM withdrawal fees came up as the second most important factor why people were holding on to high-value banknotes as a backup payment instrument.

Australia’s position in the global cashless economy

Digital transformation


In Sweden, which is often referred to as the most cashless country in the world, ATMs are found only in major cities. More than half of the country’s banks no longer handle cash, most retail outlets do not accept cash, and digitization has made its way to public toilets too!

Following Sweden’s lead, Finland and Norway have also flooded their markets with fintech digital technology solutions for easy mobile payment and online banking. Meanwhile, China, South Korea, and the United Kingdom are also taking aggressive digital transformation measures to become near-cashless societies.

Australia has been placed in the seventh position globally in terms of cashless readiness by market intelligence firm GlobalData. There’s another data point that highlights Australian consumers’ preference for contactless and e-wallet transactions, and it comes from Australian Payment Networks’ recent Digital Economy Milestones report.

Australia stands out globally with a high penetration of point-of-sale (POS) terminals. In March 2018, consumers had access to over 965,000 POS devices, a 28 percent increase from 2012 levels. Today, even after coronavirus-induced shuttering of businesses, there are close to 36,000 POS devices available for every one million Aussies. In comparison, the UK has less than 33,000 POS devices per one million citizens.

Trash the cash: A journey in the national interest

Cashless Australia

It’s important to note that the agenda of a ‘Cashless Australia’ has been witnessing a systematic push from federal institutions as well. The country’s central banking authority, the RBA, accepts that the shift to electronic payments makes a lot of sense and is likely to promote the collective welfare of Australian society.

Even though the RBA earns significant income – known as seigniorage – by issuing banknotes, Philip Lowe, the current Governor of the RBA, has been an open advocate for greater use of electronic payments. A cashless economy, Lowe concedes, can bring efficiency benefits with lower costs and more functionality and choice for users. Contactless technology, for example, reduces the time it takes to complete a transaction.

And let’s not forget that there are significant production and distribution costs associated with a cash-based economy. Since some of these are fixed costs, as the volume of cash payments falls, the average cost of transacting with cash will only go up. Lowe has also acknowledged that there is a restricted opportunity for modernization in the cash system compared to the massive scope for innovation in e-wallet and electronic payment gateways.

In this vein, a system of open banking was launched in Australia in July 2020. Accordingly, customers of the country’s big four banks – Australia and New Zealand Banking Group, Commonwealth Bank, National Australia Bank, and Westpac – can now request and share their transaction account, deposit account, credit card, and debit card data with trusted third parties, including other banks, financial institutions, and fintech companies.

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The Black Economy Taskforce and the push for digital technologies

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In November 2016, the Australian Taxation Office revealed data that showed that around 1.6 million micro and small businesses across 233 industries were a part of the country’s illegal cash economy. By December, the government had set up a task force to combat the complex social and economic problem of the ‘black economy’ – wherein people operate completely outside the tax system.

This task force estimated that the black economy made up $50 billion or 3 percent of Australia’s GDP, with the problem stemming from dishonest practices such as payment and acceptance of off-the-books cash wages, welfare fraud, moonlighting, etc., as well as illegal activities like money laundering.

Suggesting measures to combat the issue, Australia’s Black Economy Taskforce advocated strongly for the use of non-cash payment alternatives, such as mobile payments and digital wallets, and even proposed a ban on cash transactions of $10,000 or more – the rationale being that cash facilitates the black economy as it does not generate a paper-trail in the same way as digital transactions do.

The task force further argued that the decreasing costs of electronic payments meant that cash had become a more expensive way of doing business, and moving to non-cash models such as e-wallets or mobile payments would actually help to reduce operational costs. It also pointed out that many small businesses had already shifted to contactless pay because the Australian government incentivizes them with up to $20,000 in deductions from instant asset write-offs when they invest in a payment gateway software or hardware.

Cashless payment ecosystem in Australia

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Today, there are several convenient cashless payment options available to Australians. And the ever-increasing use of smartphones across all age groups is driving the next wave of payments innovation. Tap and go tech such as PayPass, digital wallet services including Android Pay, Apple Pay, WeChat Pay, and AliPay, as well as wearable payment instruments like the Apple Watch and Halo payment ring are seeing a persistent upswing in popularity.

Apart from big and small retail outlets, unattended businesses – the likes of laundromats, arcades, car washes, and children’s rides, etc. – have also outfitted their machines with telemetry-based payment gateway devices from market leaders like Nayax Australia to support multi-billing provider solution and contactless card payment.

Meanwhile, Australia’s homegrown payment systems – Eftpos, BPay, and NPP Australia – have been taking on global companies like Visa and Mastercard aggressively to make sure that the domestic cashless payment infrastructure remains innovative and customer data does not end up in the lap of offshore technology giants.

Lately, there have also been talks of NPP, Eftpos, and BPay merging together to create a national competitor to the international card schemes. A unified entity, it is argued, will help to reduce the average merchant fees that are paid to the banks even further, encouraging more small and medium businesses to adopt digital technology and contactless pay.

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Robust payments infrastructure for consumer confidence

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Apart from their ease of use and convenience, one of the chief reasons why non-traditional payment solutions and platforms have been able to gain traction in Australia is the development of robust cybersecurity technologies and frameworks by payment solutions providers.

Compared to traditional plastic cards, the assurance of security and reliability is much greater with mobile payments and digital wallet systems because they come with two layers of protection. The first layer of security is provided by the smartphone itself because it insists on passcodes and biometric authentication, such as fingerprints or facial recognition.

The other layer of security comes in the form of data encryption supplied by a merchant’s payment processor using Payment Card Industry (PCI) validated methods. This way, every time a purchase is made, the cashless payment device replaces personal card data with a tokenized number so that no point in the authorization process leads to the exposure of any sensitive data.

Mobile payments and digital wallets can also provide retail merchants with an unmistakable competitive edge. Retailers appreciate the fact that an autonomous checkout process through digital wallets frees up employees to engage with the shoppers and provide better customer service. Going digital also allows retailers to resonate more with cash-averse Gen-Z customers.

The effect of the COVID-19 pandemic on a Cashless Australia

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To say that the novel coronavirus outbreak has changed consumer behavior in Australia, and the world over, would be an understatement. One of the immediate consequences of the public health crisis was a steep reduction in cash usage. Since paper money provides a perfect environment for bacteria to thrive, countries like China, South Korea, and the United States had to take extreme steps like completely destroying or quarantining coins and banknotes to combat the spread of coronavirus.

With the pandemic pushing the country closer to a cashless society, Australia’s aforementioned big four banks also collectively removed 2,150 costly-to-operate ATM terminals and closed 175 bank branches. The move coincided with the RBA revealing survey numbers which stated that almost three-quarters of the respondents did not feel they would have a major problem if shops stopped accepting cash or if it became difficult to withdraw cash.

The Australian Banking Association’s CEO Anna Bligh commented then that Australians have been using less and less cash since 2012 and that COVID-19 has only accelerated that trend.

Digital transformation: An opportunity for banks

Digital technologies

The economic downturn shaped by COVID-19 has created a challenging environment for banks to operate in. We have already mentioned how the Big Four – the four pillars of the Australian banking industry – are shuttering branches and ATMs to cut costs.

However, with consumer behaviors changing and the public acceptance of cashless payments growing, the pandemic has also provided the banking system with a unique opportunity to accelerate the pace of digital transformation programs and retain profitability and business continuity in the long run. For example, ANZ Bank’s digital wallet transactions saw a 50 percent growth in the six months leading to July 31, 2020, compared with the same period last year.

Likewise, in its recent Future Consumer Index, global intelligence firm Ernst & Young has detailed that 62 percent of its survey respondents will use less cash in the future and 59 percent expected to use more contactless payments. The EY survey further shines a light on how digital adoption rates among small and mid-size enterprises (SMEs) have also increased.

As such, to maintain customer satisfaction and match their digital expectations across the boards, banks will need to strengthen ecosystem partnerships and create efficiencies through intelligent automation and integration of loyalty schemes within an e-wallet. Digital tools and digitized banking products, if executed well, can unlock savings in both the front and back-office banking operations, bringing down the overall cost base of the banks.

Australian industries moving away from cash

Cashless society

So, which are the industry sectors that have witnessed the most dramatic shift away from cash in the wake of the novel coronavirus pandemic?

An analysis reveals that charities have registered the largest monthly decline (23 percentage points) in cash payments between January and June 2020. Notable charities such as The Salvation Army, Movember, and Legacy have introduced tap and go donation machines. Children’s cancer charity Camp Quality has also started to accept cashless payments, and it is not uncommon to see church donations in Australia being made via an app on the offering plate.

The other major industries that no longer feel committed to cash include food and drinks, professional services, retail, beauty, and home improvement. These have witnessed a cash transaction decline varying from 22 percentage points to 13 percentage points.

It is worth observing that many forward-looking businesses have opted for contactless payment solutions that also help to increase consumer engagement, repeat business, customer loyalty, and sales through built-in marketing tools.

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Can Australia go fully cashless: The resistance

Cashless economy

While all efforts are being directed toward making Australia a cashless-ready economy, critics point out that going completely cashless may not be the best option as of now. It is argued that certain sections of society such as the elderly, the homeless population, low-income groups, or people with disabilities would struggle in a cashless world.

Pro-cash advocates also cite cases where cash is the only means of survival. A person fleeing an abusive relationship, for example, may not have access to online banking since it is commonly seen in domestic violence situations that the perpetrator controls everything, including household income. And how do you deal with people who have chosen to not go online and use the traditional cash payment methods instead, perhaps out of fear of security or data privacy? 

The Australian Banking Association reported in April 2020 that over 500,000 customers who actively used a passbook had no linked debit card. This points to the need for better education and communication about the security and robustness of commonly available digital products among all sections of society.

Addressing the digital divide


A recent survey tells that 80 percent of the country has access to the Internet. And between January 2019 and January 2020, the number of mobile connections in Australia increased by 407,000 or 1.3 percent. Arguably, Internet access has become so pervasive across the country that the Australian Bureau of Statistics (ABS) is dropping the longstanding question about Internet usage from the 2021 Census.

However, this still leaves out about 2.5 million Australians who are not connected to the internet. The data from ABS suggests that hundreds of thousands of Aussies are not online either because they are located too remotely, or they lack digital literacy, or they simply cannot afford an internet connection.

The COVID-19 pandemic made their lack of connectivity an even more pressing issue because not only were these people unable to take advantage of online retail and mobile payments, the unconnected were also deprived of online education, remote work, and telehealth during an unprecedented public health emergency.

The Australian government has now launched a series of regional communications programs, including an $83 million grants program, a new round of mobile blackspot funding, and a $900,000 Regional Tech Hub to help bridge the digital divide. And this step would also help bring Australia closer to its cashless future.

Preparing for 2021 and beyond

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According to a recent survey by Capterra, 58 percent of Aussies have a mobile wallet installed on their smartphones, and 97 percent of respondents plan to continue the coronavirus payment trend of contactless pay in the post-COVID-19 era too. The survey also found more than half of Australians (55 percent) were comfortable with the idea of going completely cashless.

However, the fact that online payment systems are vulnerable to technical glitches, hacking, power outages, and telecommunication breakdowns cannot be ignored. An operational incident at the RBA in August 2018, for example, saw a number of the bank’s core systems becoming unavailable for some hours – including the Fast Settlement Service. And it all started with a routine fire test.

As such, the need to develop an emergency backup system that would support mobile and contactless payments has become a necessity rather than a luxury across the world. Possibly running on independent grids and telecom networks, such a system would help to keep payment systems up and working even in case of a catastrophe or a natural disaster.

Global management consulting firm McKinsey & Company also points to a greater need for ongoing innovation in enhanced authorization, real-time data connectivity, better data-enabled fraud, sub-merchant underwriting decisions, etc. The merchant acquiring industry will also need to up its game to support retailers efficiently across geographies, verticals, and devices.

How Nayax Australia can revolutionize your unattended business

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As the world’s leading complete cashless solution, Nayax Australia is known to transform unattended machines into 24/7 retail stores. Offering the most diverse and inclusive payment options in Australia, Nayax helps business owners to improve their daily operations and long-term planning with telemetry services that ensure continuous connectivity and a comprehensive management suite for remote control of the assets.

A deep pool of talented in-house R&D and payment teams continually look for ways to improve both customer and consumer experiences, with one of the most recent advances coming in the form of a Multi-Billing Provider Solution which translates into fewer lost sales for retailers.

Gold Coast, Queensland-based GC Laundry Equipment, a family-owned master distributorship of commercial washers and dryers, has been working with Nayax Australia for several years now. The company’s Director, Phil Hodges, shares that due to increased cashless usage in Australia, their customers’ customers (the end users) are not only familiar with tap and pay technology, but that they prefer the ease and convenience with cashless payments.

“We have experienced unprecedented sales in 2020 and believe that Nayax’s solutions have contributed to this success,” says Hodges. “We recommend all our customers to install Nayax’s cashless payment devices into their laundromat set-up. The painless onboarding process that has been created by Nayax’s team lets our customers begin accepting payments as soon as the devices are installed, and they enjoy the flexibility Nayax gives them, both in payment options and operations.”

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