27th June, 2018

Why NZ’s on track to become cashless within a decade

When just 27 percent of all transactions are made in cash (and falling), is there much of a future for notes and coins?

A recent survey of small businesses in New Zealand has found local transactions made in cash now account for just 27 percent of all transactions.

Online bank transfers (71 percent), online payments (64 percent), credit card (40 percent) and eftpos (39 percent) all rank as more popular forms of payment – and it’s leading NZ businesses to consider which way the wind is blowing.

Thirty-six percent of respondents said the NZ economy could be totally cashless within a decade, with 42 percent saying it would take a touch longer.

Just 21 percent of respondents think the NZ economy will always need cash payment.

“Cash is well on the road to extinction,” said MYOB general manager Carolyn Luey.

“Within 10 years it’ll be as rare to pay for things with notes and coins as it is to use a cheque.”

New technologies such as digital wallets and platforms using Open Banking are becoming more popular, and they’re making Kiwis take a second look at the need for cash.

“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,” said Luey.

“New technologies such as Apple and Android Pay mean customer save around half the time of swiping and entering a pin.”

But this isn’t just theoretical – businesses are noticing it in their everyday dealings.

Why cash costs

“You don’t need it to pay for parking, you don’t need for it catch a bus or train,” said Martin Howard.

He’s the owner of Eden Espresso Bar and Coffee Station Papakura.

“Cash is also time consuming as it requires a trip to the bank at the end of the day,” said Howard.

He said while there are merchant fees associated with card transactions, the cost of these were more than offset by the convenience those transactions offered.

“While the holding cost of physical money is hidden, it is quite material to our economy – ditching physical money would help speed up cash flow,” said Luey.

“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.”

It’s why Howard is weighing up going cashless.

“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.”

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Whether NZ ends up going cashless in a decade or within 20 years, the message is clear: things are changing, and those plugged in will reap the benefits.

“The future is all about making things as easy for customers as possible,” said Luey.

“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.”