More supermarkets ditch cash payments for digital and contactless transactions

Cash is on its way out as a way to pay in Australia, as stores turn their backs on it and new technologies drive its demise.

It’s being phased out in shopping centres, discouraged at servos, and rejected in some smaller supermarkets.

Cash is increasingly on its way out in Australia, replaced by digital transactions and mobile wallets, with almost half of Australians now paying for goods with their smartphones.

New research also shows Australians are spending more in cash-free ways, while the adoption of digital wallets is forecast to almost double worldwide by 2025.

Not every one is happy about the move, though, with experts warning banning cash can disadvantage some consumers and cost those who don’t pay close attention to their budget.

Shoppers in some Woolworths Metro outlets in Sydney, Brisbane and Melbourne recently noticed signs warning the stores would no longer accept cash as payment.

A total of 12 stores nationally now no longer accept legal tender.

Cash is increasingly on its way out in Australia, replaced by digital transactions and mobile wallets. Picture: iStock

The move to cashless payments at the stores follows a trial at Woolworths Metro outlets which began in October, after they noticed a reduction in cash transactions.

In a statement, the company said the trial would not be rolled out across its larger supermarkets yet as “we know that cash remains an important payment option for many of our customers”.

Digital wallets and contactless payments with credit and debit cards have surged in popularity during the past year, however, with more stores discouraging cash payments due to COVID-19 transmission fears.

New research from GlobalData shows card payments in Australia rose to $698 billion last year despite less spending overall, and banking and payments analyst Nikhil Reddy said it had become a much more popular way to pay for even small purchases.

“Australians are prolific users of payment cards, with the frequency of card payments at 172 times (per user) in 2020 — one of the highest in the Asia-Pacific region,” she said.

“The shift from low-value cash transactions to contactless card payments is supporting this growth.”

MasterCard’s State of Pay study also found almost half of Australian consumers were using smartphones to make payments, and 43 per cent had signed up to use their phone as a digital wallet, tapping it at the cash register in place of a credit or debit card.

Spending with smartphone wallets is expected to almost double worldwide by 2025.

Digital wallets available in Australia include Apple Pay, Google Pay, Samsung Pay and Beem It. Most are considered more secure than using a physical payment card as they transmit a random string of numbers (token) rather than a card’s number, and require a PIN, face or fingerprint scan.

But budgeting expert and author of Underspent Rachel Smith said removing cash as an option for payment could fuel budget blowouts for some consumers.

Shoppers in some Woolworths Metro recently noticed signs warning the stores would no longer accept cash as payment. Picture: NCA NewsWire / Gaye Gerard

“It’s really easy to overspend, to mindlessly spend and to lose transparency over your spending when you pay digitally,” she said.

“When you’re a kid with pocket money, for example, and you go to the movies and come home with 50c left, you learn the value of money. When you’ve got tap-and-go and you’re tapping with your phone, you’ve got not transparency over your spending.”

Despite greater adoption of digital and card payments, however, EFTPOS chief executive Stephen Benton said cash was not dead yet.

Mr Benton said Australians withdrew less cash using their debit cards at cash registers last year but physical currency was still an important payment method for many users.

“Our mobile volumes have been up significantly and we’ve seen more shopping online but cash will remain for quite some time,” he said.

“At the peak of COVID, we saw (cash withdrawals) drop by about 50 per cent but it is going back up.”

EFTPOS would continue to invest in more digital payments options though, he said, including mobile wallets, QR codes for payment, and micropayments through Hedera that could see connected cars, news consumers and social media users pay fractions of a cent.

Ms Smith said savvy shoppers who weren’t able to use cash at the register should always ask for receipts or write their purchase details down, check their records against their credit and bank statements, and consider keeping different bank accounts to cover expenses.