Cash’s comeback gathers pace as digital money worries more people

The end of notes and coins appears to have been called too early, and one key event could bring cash back with a vengeance.

For years I’ve been writing about the rapid rise of digital banking and transactions and how they are the future of money.

After all but destroying the use of cheques, it seemed that cash was next in the sights of the digital world – and we all thought it would have been accelerated by the pandemic when handing over potentially Covid-covered coins and notes was shunned even more.

But cash isn’t going away. And it may stick around for longer than most people thought.

Statistics show cash may be coming back into fashion, particularly as Australians are flooded with scam attacks on our phones, computers and emails.

Hearing stories about hackers stealing people’s health care data and other records has been horrific, and imagine if more hack attacks target peoples’ online bank accounts, digital wallets or severely compromise a big bank or payment company.

If people lose faith in digital money, I suspect we will see a significant shift back to cash.

Increasing fees on digital transactions could also push people toward more traditional ways of spending, although it is likely that the future will hold a mixture of both.

New figures from the Reserve Bank of Australia show withdrawals from ATMs have been rising, up 1.6 per cent between May and June.

ATM withdrawal numbers – almost 30 million a month – have halved since a decade ago, but have remained steady since 2021.

Covid could have killed cash, but it didn’t, and real money is coming back. Picture: iStock

ATM Industry Association executive director Sandra Smith says retailers are not generally going cashless and many young consumers are finding it is too easy to “tap your money away”.

Jason Bryce from Cash Welcome says average households could be paying about $1500 a year in card surcharges if they tap their phone for everything.

On the other hand, electronic transactions are preferred by many businesses for safety and security reasons, and the Australian Taxation Office is a fan of them too because cash transactions cannot be in the way the ATO monitors everything else.

Research in 2021 by digital bank ME found 35 per cent of people would be happy to go completely cashless by 2022, and young people were the most supportive of a cashless world. It didn’t happen in 2022 and I don’t reckon it will by 2032 either.

Cash savings are growing in popularity, with a new Finder.com.au survey reporting that almost one in three people have opened a savings account in the past year to benefit from higher interest rates.

Finder’s latest consumer sentiment tracker shows the average Australian has $30,652 in savings, and people were able to put away an average $730 in July.

Of course, you don’t need to have physical cash to have a cash savings account, but the idea of stashing money in a bank is popular again as people can now earn more than 5 per cent on their savings.

It’s also a reason why it’s a bad idea to stash cash under your mattress, or in your backyard. Inflation eats into your wealth, and if you’ve kept money home in the past two years it has now likely lost 10 per cent of its value.

While cash use remains resilient, the use of cheques continues to dwindle. The new RBA statistics show 1.9 million cheques were drawn in June, down 30 per cent in two years and down 88 per cent in the past decade.

Experts say it’s a generational thing, and as the Baby Boomers and those who came before them disappear, we will see cheque use shrink further.

Nobody knows whether cash will be a generational thing too, but a big crisis in digital finance will probably ensure that it’s not.

Originally published as Cash’s comeback gathers pace as digital money worries more people