Coronavirus forcing Aussies to pay by card instead of cash
Australians are being pushed to ditch the cash and pay by card to avoid infection during the coronavirus crisis but experts say moving to a cashless economy has its pitfalls when it comes to money management.
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Doing away with physical money could do us more harm than good as Australians continue to be pushed into quickly becoming a cashless society, experts say.
As the old saying goes, “a penny saved is a penny earned”.
But the handling of a wad of cash and handful of coins has quickly become frowned upon as the world grapples with the war against COVID-19.
Public health officials globally have encouraged people to quit paying with physical money and switch to making card-only payments to reduce the risk of transferring germs and potentially further spreading coronavirus.
Most supermarkets, coffee shops and operating businesses now have signs at their store entries and at payment terminals instructing customers to steer clear of paying with cash and instead use plastic only.
So, whether consumers like it not they are being directed to pay with a card or a device that has a digital wallet functionality instead.
Just last week the self-regulatory body for the payments industry, the Australian Payments Network (AusPayNet), revealed it was doubling the “tap and go” maximum repayments from $100 to $200 for the next three months which could be a game changer for money management in Australia.
AusPayNet’s chief executive officer Andy White said the new increased limit to tap at the checkout was an important response to coronavirus and would begin from Monday.
“Consumers are tending to buy more, less often,” he said.
“The new $200 contactless limit will mean fewer consumers need to touch the payment terminal.”
It means customers can wave their card or device at the checkout without the need to touch a PIN pad and enter in a four-digit code.
But it remains to be seen whether moving to a cashless economy is a good thing.
DEATH OF CASH
The Reserve Bank of Australia showed in the 2019 Consumer Payments Survey the value of cash payments accounted for just 10 per cent of all consumer payments, down from about 40 per cent in 2007.
And you only need to look around and see ATMs disappearing from street corners disappearing and branches closing down to see that the trend will continue.
A News Corp investigation in September last year found in the 12 months prior Westpac group disposed of 57 branches and ripped out 349 ATMS nationally, followed by ANZ which removed 52 branches and 58 ATMs.
The nation’s biggest bank, the Commonwealth Bank, removed 39 branches and 208 ATMs in the 12 months until June 30.
National Australia Bank removed nine branches in the past year, but bucked the trend and increased its ATM numbers by 22.
So the move towards card payments instead of cash has quickly evolved, well before COVID-19 hit Australia.
But some nations have moved towards cashless economies for years now including Nordic locations such as Sweden, Denmark and Norway.
Despite this it has definitely had its challenges — many retirees, people with disabilities and newly arrived refugees have been found to struggle with digital transactions.
MONEY MANAGEMENT
Barefoot Investor Scott Pape has for years advocated for coins jars to help kids learn about managing their money but said it’s still critical to helping educate people from all ages about basic money management.
“I use coins at home to pay my kids pocket money and it works really well because it’s visual,” he said.
“It shows them the money comes from working.”
Highlighted in his latest book, The Barefoot Investor for Families, he encourages parents and children to have three jam jars labelled splurge, smile and give.
In each jar kids divvy up their cash payments earned from doing chores into jars and they can then watch their finances grow.
Pape said a fundamental difference between paying by card instead of cash is that it removes the pain that is associated with paying by notes and coins.
“When you don’t see the physical cash leave your hands it’s a lot easier to spend that money,” he said.
“I understand in this era where people are worried about germs and a virus so having contactless payments makes a lot of sense.”
But despite this Pape said cash would always have its place in society.
“Whether it be kids with their pocket money or a lot of low-income earners who are some of the best money managers because they have to be, cash is still really important,” he said.
OLDER AUSTRALIANS
A report by National Seniors Australia in 2019 surveyed 4,500 of their members and found about one in five were not comfortable with digital technology and only used it when absolutely necessary.
NSA’s chief advocate Ian Henschke also said recent data showed 2.5 million Australians do not have a computer and many have failed to embrace new technology such as card payments.
“Cash is still important for older Australians,” he said.
“They will have difficulty if they can’t pay cash but it means they will have to talk to friends and family and see if they can help them do their shopping for them and they will fix them up later.
“Money is a problem at this time because of the means of transmission (of COVID-19) so I think it means they are going to have to recognise this is something that will change our lives at least not forever but for the next six months.”
Mr Henschke said a lot of older Australians — those above 70 — felt comfortable with cash and it was easier to budget using physical money.
“They will put aside a certain amount of money to pay for their phone bill or electricity bill this way,” he said.
“They will withdraw their pensions in cash, use their passbook accounts, it’s what people get used to.”
FRAUD
There are still many consumers who are worried when they use card they run the risk of getting scammed.
The Assistant Minister Superannuation, Financial Services and Financial Technology Jane Hume said shoppers should be assured they could use card payments safely.
She said this would continue to be a safe option during the coronavirus pandemic.
“Raising the contactless limits is a sensible and practical measure to slow the spread of coronavirus,” Minister Hume said.
“It will help Australians stay safe and confident when shopping for essentials.”
But National Seniors’ Mr Henschke said there still remained many people who worried about relying on cards to pay.
“We know a lot of older Australians are worried about being scammed,” he said.
“They also worry about doing electronic transactions and they will get it wrong by putting in the wrong number, they don’t feel confident.”
Originally published as Coronavirus forcing Aussies to pay by card instead of cash