14th July, 2020
COVID-19 has forced Australians to change the way we think about money – with cashless payments now a necessity across the nation. So where does cash factor into our future?
Social distancing guidelines in Australia have made it clear that cash is no longer king.
Instead, cashless payment systems – such as credit cards and mobile phones – are confidently overtaking cash as a preferred payment method for many during the pandemic.
It’s not just hearsay, either – in a study intended to shine a light on consumer spending during COVID-19, MYOB found that almost half of respondents used their credit card more frequently than they did before the pandemic.
But despite this increased uptake of cashless payments – 59 percent of respondents said that stores local to them offered only contactless payments – the report also showed that consumers were on the fence about the change.
When asked how they felt about business using exclusively contactless payment options, only 33 percent approved, while 39 percent were indifferent and 24 percent disapproved altogether.
Whether you welcome them or not, cashless payments are going to continue to play a big role in Australia in the coming months, but this then begs the question: is the rapid adoption of cashless payments a response to the pandemic, or a move that we were always going to make?
Although some people will inevitably have concerns about moving to a completely cashless system – particularly if their business has always been cash-centric – the move away from paper money in our modern world is feeling more and more inevitable.
Pip Stocks, founder of customer experience platform Hearsay and brand and customer experience consultancy firm BrandHook, echoes this sentiment.
“We were already of the road to a cashless society. According to the Reserve Bank’s 2019 Consumer Payments Survey, Australians are increasingly preferring to use electronic payment methods — with just 27 percent of all consumer payments made with cash.”
Statistics back this up – MYOB’s consumer snapshot found that after the pandemic 59 percent of people in the study planned on using less cash than they previously did, while 15 percent said they didn’t plan on using cash anymore at all.
Some might believe that the risk of handling cash is to blame for the transition to completely cashless payments, but evidence suggests that it’s related more to how our lifestyles are adapting to a new, highly-distanced world.
“People miss people, but there will be a shift in doing what they can from home. Some fitness classes, some work, some more take out eating.
“There will be a reluctance to immediately resume leisure activities that involve distance and large crowds.”
This conservative approach to spending is likely also closely related to shrinking household incomes.
“The MYOB research also suggests there is more financial hardship out there with 25 percent of people spending tax returns on catching up on bills and 13 percent supplementing lost income.
“This research is consistent with data from the C|T Group published in April,” said Stocks.
The findings from MYOB’s research also found that little luxuries were becoming a much smaller priority for people. with 49 percent of respondents reporting they spent less on non-essential items during the pandemic due to uncertainty related to the recovery period.
“Mindless consumption will change,” said Stocks.
“We are hearing a lot of people reset their consumption and re-evaluate what the need and want and which brands they buy that from.
“If they buy, people will research more and spend more consciously. Extravagant spending and unconscious spending will now be much more considered.”
Stocks doesn’t necessarily believe this is all to do with thrifty spending, but it more so reflects a desire from consumers to develop meaningful relationships with certain brands.
“Buying from local is also consistent with what we are seeing that consumers are looking for a more authentic, genuine relationship with brands.”
Sign up for added insights and business-critical news from MYOB.
Although cash falling on the backburner is in part about reducing infection rates, evidence suggests that the future does not bode well for paper currency.
READ: Why going cash-free isn’t just about tech, but consumer attitudes
We’re currently experiencing a remarkable shift in how consumers use and spend their hard-earned money, and there is a good chance that these lifestyle changes will still be around after COVID-19 is long gone.
With this in mind, it’s clear that widespread adoption of cashless systems is a “when,” rather than an “if” – although you might favour cash in your business model, now is an excellent time to start preparing for the move to cashless.