It has been predicted for a very long time, but the day when cash money is phased out may be a lot closer than we think ! Citibank has announced that its Australian branches will no longer dispense cash simply because this is no longer a service its customers demand. In the past twelve months just four percent of the people who bank with Citi have needed a branch to dispense that old fashioned folding money.
No doubt the Mandarins in Treasury are salivating at the tax bonanza that the phasing out of cash money would bring. For a start, it would cripple the "black "economy because for the first time every transaction would leave an electronic trail. It would put an end to those little brown envelopes that change hands in the pub to pay for "services rendered " by the people who have the power to corrupt.
There is a certain inevitability in the phasing out of paper money. It started when the banks began to close down branches and replace them with ATM's. That introduced a risk factor, both from street robberies to illicit card readers installed by bandits to allow them to capture a users PIN and raid accounts. As a result, most major stores permit customers to withdraw cash at their checkouts, eliminating those hazards and increasing cash availability.
The weak point in electronic money management was the need for a plastic card with an implanted chip and its attendant PIN. Many elderly people had problems remembering their PIN and there was an age gap in the popularity of electronic banking. Fearful of a voter backlash, the government didn't push the issue and let it proceed at its own pace.
Things speeded up with the advent of the Smartphone. These achieved almost universal market capacity very quickly and their electronic ability to undertake other tasks included replacing both that chip embedded card and its PIN. It is possible to pay for a purchase by tapping your Smartphone on a terminal.
Now we are starting to see limitations on cash money appear in the marketplace. The old practice of food being handled by a shop assistant who then handles the money proffered to pay for it is falling into disrepute. Notes and coins have become a costly burden to the retail trade. Banks refuse to count and accept big deposits over the counter and merchants now have to pay for the takings to be picked up by a money handling firm - who charge to transport, count and do the deposit for the merchant, and that has become a substantial business cost.
The days are fast approaching when we will see retailers who refuse to accept payment in cash, or who impose a surcharge for that privilege. All government pensions and allowances are paid electronically into the beneficiaries bank account - and how they disperse it from there is entirely their responsibility. The government has toyed with making some pensions only tradeable by dispersal through a credit card with limitations on what can be purchased.
Transition to a cashless society may happen as the majority of merchants discontinue accepting cash or it may be imposed by government fiat - as is happening in India. The highest denomination Indian banknotes are the equivalent of our twenty and ten dollar bills - and the government has withdrawn them from legal tender. Citizens must take their old money to a bank and exchange it for smaller denomination bills - before it becomes worthless.
The Indian government is hoping that the inconvenience of trying to pay with a wad of smaller bills will drive the Indian economy to electronic banking, and this coupled with the introduction of a national GST will improve the economy. India is notorious for the vast number of people who trade in cash - and pay no tax.
An Australian move to a cashless society seems likely to be a slow transition as the convenience of electronic banking merges with the increasing cost of dealing with notes and coins as they progress from the merchant to a bankers vault. But it may be closer than you think !
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