New research reveals almost 80 per cent of local business owners plan to ditch physical money for digital payments, while more than a third expect our economy will be cashless within a decade.
Key findings include:
• 36% predict our economy will be cashless within 10 years;
• 42% expect it will take two decades; while just
• 21% think our economy will always need physical currency.
Just like cassette players, turtleneck jumpers and the perennial favourite Maggie’s Garden Show, cash could soon be a thing of the past.
In fact, according to new research, the popularity of tap-and-go payments could turn the New Zealand economy cashless as soon as 2028, making ATMs as rare as old telephone boxes.
Speaking at the Payments NZ conference The Point in Auckland today, MYOB general manager Carolyn Luey urged industry leaders to embrace a cashless economy, claiming it would be simpler, cheaper and lower risk for local business owners.
“Cash is well on the road to extinction,” said Ms Luey.
“Within 10 years, it’ll be as rare to pay for things with notes and coins than it is to use a cheque.”
The latest MYOB Snapshot, a survey of 400 New Zealand
small-to-medium sized businesses, found that more than one in three
Kiwis (36 per cent) predict the local economy will be cashless within
10 years, while a further 42 per cent think it will take two
And, while there are two sides of the coin, just one in five New Zealanders see a role for cash for a long time to come.
Ms Luey pointed out that as digital wallets and the platforms using Open Banking become more popular, Kiwis are likely to use cash less — meaning physical money could become obsolete even sooner than we think.
“Contactless enablement is helping more and more Kiwi businesses take advantage of new payment technology, and consumer demand is only rising.”
But she explained that New Zealand’s move to a “new economy” raises the need to balance the convenience Kiwis want with security.
“As online payments continue to grow, so too does the likelihood of fraud.
"It’s everyone’s responsibility from consumers themselves to digital commerce providers, to ensure card data is protected," said Ms Luey.
According to the MYOB survey, local transactions made in cash now averages just 27 per cent, with a mere 3 per cent of New Zealand businesses saying all their transactions are in cash.
The most popular payment methods are now bank transfers (71 per cent), online payments (64 per cent), credit cards (40 per cent), and Eftpos (39 per cent). Of the businesses surveyed, only half use cash and 12 per cent have shifted to mobile payments.
And Ms Luey said local consumers are driving the change.
“The way we pay for goods and services has changed significantly in the past few years, mainly because of the convenience for the end customer — nowadays electronic payments are efficient and quick.
“New technologies, such as Apple and Android Pay, mean customers save around half the time of swiping and entering a pin.”
She said many customers now expect to be able to pay by phone and almost all new credit and debit cards now allow Kiwis to pay with a single tap – while cheques will be officially phased out of the New Zealand economy by October this year.
“A cashless economy is the logical next step,” she said. And recent data shows that Ms Luey has good reason to think so.
According to latest figures from the World Payments Report 2017, New Zealand is one of the leading cashless economies with approximately two-thirds of our spending taking place electronically, ahead of Australia and the United Kingdom where it’s just over half.
The Scandinavian countries are even further advanced. The Norwegian government is planning to eliminate paper money by 2030, while in Sweden, half of all banks are now refusing to process cash withdrawals or deposits, cash transactions make up just two per cent of all payments and cash is used for barely 20 per cent of retail transactions.
Simply put, businesses worldwide are ditching notes and coins for bits and bytes.
It is a sentiment echoed by Martin Howard, owner of Eden Espresso Bar and Coffee Station Papakura.
He questions why people carry cash – especially in a big city.
“You don’t need it to pay for parking, you don’t need it to catch a bus or a train,” says Mr Howard.
While businesses incur a fee for offering credit card – and now contactless card payments, he says the savings from not having to handle as much cash are worth it.
“For our business, 90 per cent of our takings are from a card so being charged a fee to offer these sorts of payments is a very small percentage.
“Cash is also time-consuming as it requires a trip to the bank at the end of the day.”
Mr Howard says when the time comes, within the next five to 10 years, he would consider making the transition to a cashless business.
“It’s something I would definitely look into, when the time comes, as it takes away some complexity – there’s no opportunity for theft or suspicion and there’s more security.”
Today, Ms Luey told delegates at The Point conference that local business owners would save themselves a “significant amount” of time and money if New Zealand moved away from cash.
“While the holding cost of physical money is quite hidden across our economy, it is material – so, ditching cash would help speed up cashflow.
“Electronic transactions flow seamlessly into the digital ecosystem which reduces a business owner’s visits to the bank and eliminates their need to balance the till.
“In many cases removing these tasks would cover extra credit card fees they may incur.”
Carolyn Luey says New Zealand businesses can expect to see enhancements that allow customers to pay directly from their invoices, speeding up cashflow and making business life easier.
MYOB has bet big on payments, recently acquiring payment processing provider Paycorp for A$48 million. It says the market for fees from payments through accounting software platforms is estimated to be more than A$700 million.
“The future is all about making things as easy for customers as possible,” said Luey.
“But for now, it means you can tap-and-go for your morning coffee rather than hunt for loose coins at the bottom of your bag.”
For further comment or other information, please contact:
Luke Chivers, MYOB NZ public relations consultant
M: +64 27-569-8907 / E: firstname.lastname@example.org
MYOB (ASX: MYO) is a leading cloud-based business management solutions provider. It makes business life easier for approximately 1.2 million businesses across Australia and New Zealand by simplifying accounting, payroll, tax, practice management, CRM, websites, job costing, inventory and more. MYOB provides ongoing support via many client service channels including a network of over 40,000 accountants, bookkeepers and other consultants. It is committed to ongoing innovation, particularly in cloud computing solutions, and in 2015 was awarded the BRW award for the most innovative large company for 500+ employees and placed 2nd in BRW’s Most Innovative Companies Award list across all categories nationally. For more information, visit myob.co.nz or follow @MYOB on Twitter.