Australia's transition to a cashless society raises concerns about financial exclusion, privacy and safety Aside from those that involve the tooth fairy, cash transactions are at an all-time low. According to the Reserve Bank of Australia (RBA), cash accounted for just 13 per cent of all payments made in 2022. The ability to pay by tapping our phones is partly driving the downward trend. "Even credit cards, or debit cards, are starting to feel a bit antiquated," Chris Berg, director of the RMIT Blockchain Innovation Hub, tells ABC RN's. Cash payments plummeted during the first two years of the coronavirus pandemic, when online shopping spiked, and they show little sign of bouncing back. According to RBA data, just 7 per cent of Australians are "high cash users" (those who use cash for 80 percent or more of their in-person transactions). That's a 50 per cent drop since 2019. While the benefits of phasing out cash include increased convenience, transparency and safety, the transition to a wholly digital economy risks excluding some sections of society. "A lot of policymakers will talk about the end of cash as if it is something we should be aspiring to," Dr Berg says. It's probably the way we are going, but it shouldn't be a public policy decision because there are some people who still need cash. So, if a cashless society doesn't benefit everyone, who pays when a country goes cash-free?

Disadvantaged and at-risk communities The transition away from cash disproportionately affects disadvantaged groups, such as people with disabilities and those who live in remote and regional Australia who have difficulty accessing digital financial services. Many people over 65 still rely on cash, with nearly one in five qualifying as high cash users. RBA data also shows that people from low-income households use cash more often than their more affluent counterparts. And while most Australians have access to a bank account, a small percentage of the population does not. Often described as "unbanked", this group comprises undocumented workers and others who lack identification, such as newly arrived migrants. "In the absence of cash, they are going to really struggle," Dr Berg says. In Sweden, one of the first nations in the world to embrace a cash-free economy, concerns about financial exclusion among marginalised communities saw a backlash against the shift to cashlessness, particularly when many bank branches removed cash-handling facilities altogether. Many now believe Sweden went too hard too early, removing cash-handling infrastructure that is hard to replace and leaving these vulnerable groups behind. Cash can also be a lifeline for victims of abuse who might have limited access to online financial services and cards. "There are a lot of people who secret away cash ... [from] potentially violent or abusive partners," Dr Berg says. A spokesperson from 1800RESPECT told ABC RN that "access to cash can support a person experiencing family, domestic or sexual violence to make discreet purchases or payments, reducing their risk of being monitored or tracked through bank transactions by the person using violence". And in emergency situations, like floods and bushfires, "cash is king", says creative technologist Jessie Hughes. Electricity and telecommunications outages can take out digital networks and people's access to funds with them. For instance, during the devastating Lismore floods in 2022, electronic payment systems crashed, leaving flood victims unable to pay for essential items like water, food and fuel. Five local credit unions arranged for a helicopter to deliver a cash-filled ATM to the flood- ravaged town, where blackouts lasted for weeks.

People who care about privacy Regulators such as the International Monetary Fund (IMF) are pushing to phase out cash, citing transparency as a major reason. But "transparency is a double-edged sword", says Chris Vasantkumar, a lecturer at Macquarie University who studies the anthropology of cash and cashlessness. "One person's transparency is another person's surveillance." Dr Berg says certain pockets of the economy rely on cash because of the privacy it offers. The most obvious one here is sex work ... [which] tend[s] to be cash-heavy because [customers] like the privacy of cash.

The changing role of cash

According to an RBA survey, more than 25 per cent of respondents report they would experience inconvenience or hardship if cash was hard to access or use. For some, cash is less a valuable method of payment and more a store of value representing security. The onset of the coronavirus pandemic in 2020 saw a run on cash as bank customers withdrew funds, fearful of a stock market crash. The amount of cash that we use to buy and sell things has continued to decline [since the pandemic] ... but the amount of cash that's out there in the world has spiked, and it's because people aren't using it as a means of exchange, they're using it as a kind of security blanket, says Dr Vasantkumar. Banknote data from the RBA Annual Report 2022 bears this out: Although cash transactions are down, cash in circulation is up.

According to the RBA, more than 2 billion banknotes are in circulation with a value of more than $102billion, which amounts to around $4,000 in cash per Australian. Dr Vasantkumar argues that countries like Sweden have recognised that regulation is necessary to ensure financial inclusion and the ongoing viability of cash, because while cash still exists in Australia plenty are quite content to hold onto it. Based on the article and your own internet research, answer the following questions with critical arguments

A. Do you think FinTech lending has a role to play with the future cashless society of Australia? Explain how the rise of FinTech lending in Australia and the way they process lenders information (explained in the module 3 journal article) will be affected by this cashless transition?

B. If you owned a small business in remote regional Australia, how will your business operations and potential lending proposals be affected by this cashless transition? Explain your rationales critically.