The cinema was ‘cash-free’ but the eftpos machines were down. Was I in a movie?

While stepping up to buy tickets at the cinema on Friday evening, I had a moment of panic. As I shuffled to the front of the line, two signs glared at me: one declared the venue was cash-free, the other that card payment terminals were down. Comedic in retrospect, a dilemma at the moment.

I breathed a sigh of relief when the man at the box office assured me they were accepting card payments. “That,” he said, pointing to the second sign, “was just during the outage.” I felt my heart rate steady – until he flashed me a knowing smile as I asked for tickets to Yorgos Lanthimos’ absurdist black comedy Kinds of Kindness. (If you haven’t seen it, it’s weird. And deeply unsettling.)

More blue screens of death, or worse, may be on the way due to long, interconnected supply chains that have improved our lives over recent years.

The point of the film isn’t immediately apparent – at least to an amateur like me. But there was one line that got me thinking. Paraphrased, it was this: it’s better to rely on something consistently available, rather than something that depletes each day. Now, how does this relate to CrowdStrike’s outage? Bear with me.

Over the past decade, cash – and cash use – has been dwindling. At the end of the 2022-23 financial year, the total value of cash in circulation fell by almost $1.1 billion to $101.3 billion – the smallest amount since November 2019. And cash usage has plunged from about one-third of transactions in 2019 to just 16 per cent in 2022. At the same time, many venues are switching to “cashless” trading.

Meanwhile, in 2022, 76 per cent of payments were made by card, up from 63 per cent in 2019. An additional 7 per cent were made through BPAY, internet or phone banking and PayPal, with only 13 per cent made through cash.

While cash is not yet at the point of being depleted, there are signs it’s on the way out. Treasurer Jim Chalmers last year vowed to keep notes flowing, but as cash usage has fallen, cash transportation has become a less profitable business. So much so that the competition watchdog let Armaguard merge with its biggest rival last year, creating a near monopoly. Even then, the company struggled. In June, big banks, retail giants and Australia Post threw Armaguard a $50 million lifeline to keep it supplying cash.

The CrowdStrike outage reminded us of the importance of cash. But we’re abandoning hard currency in favour of convenience. Credit: Dominic Lorrimer

Cash is important – especially for the homeless, domestic violence victims and other vulnerable people who may not have easy access to electronic or card payments. Until this week, it was these people that the debate around keeping cash in circulation focused on. But the CrowdStrike outage changed that. Sure, it might be the first time we’ve had an outage of such incredible scale. But it was a wake-up call. Millions of people across Australia, even just for a couple of hours, lost the ability to make payments, catch flights and use their laptops.

In our drive for efficiency and scale, we’ve sometimes trampled over the value of having multiple competing options. That’s not just in terms of payment options but also when it comes to companies – especially with the rise of the tech giants.

There are benefits to putting our goods and services into the hands of a few big players. It can lead to economies of scale: cost savings from those companies spreading their production costs across a bigger output. Of course, those savings aren’t always passed on to consumers.

Bigger companies can also often invest a lot more than smaller companies in measures such as cybersecurity and innovation. But these are not foolproof. Just look at the cyber breaches at Optus and MediBank – both fairly major companies – in 2022, and the programming error at CrowdStrike, a company once valued at more than $US80 billion ($120 billion), which led to the update that temporarily wiped out swathes of the economy worldwide.

The challenge, now, is this: should we trust a few big companies to deliver products and software that form the backbone of many of our essential services, reaping some of the benefits of their scale? Or do we need to focus on ensuring we’re not reliant on one big company?

Similarly, should we keep trundling towards a virtually cashless society? Or is there a stronger case for keeping cash alive, even if it comes with a higher price tag, to have on-call, especially for these major outages?

Innovation slip-ups, like the one at CrowdStrike, are preventable but probably inevitable in the long run. While we might sacrifice some efficiency, there’s a solid case for keeping cash in our coffers and preventing tech firms from amassing such scale that one mistake can disrupt a huge segment of society. Taking these actions might be inefficient in the narrow sense, but they’re efficient in that they provide a sort of “insurance” against mass outages.

Former ACCC chair Allan Fels says while there’s little Australia can do directly to reduce concentration among tech giants, it could influence policy in the US and European Union. “Competition law tends to focus on high prices that come from concentration, but there needs to be more emphasis on the vulnerability arising from relying on a single supplier or limited suppliers,” he says. “The best Australia can do is continue to contribute to international forums because we are listened to. We need global support for a global issue.”

Until tech firms can prove their offerings will be consistently available, it’s better to rely on the slightly depleting process of keeping our options open – and to fight for it.

Millie Muroi is a business reporter at the Herald and The Age.