What is a cashless society?
A cashless society is one where goods and services are purchased using digital payment methods like credit and debit cards, mobile wallets, cryptocurrency, and payment apps rather than physical currency (notes and coins).
Australians have thoroughly embraced cashless payments. A new report from fintech company FIS Global predicts that Australia will be the most cashless society in the Asia Pacific region by 2025. Their 2022 Global Payments Report suggests that digital wallets will be the most popular way for Australians to pay within the next three years, with just 2% of point of sale (POS) transactions using cash.
What is a digital wallet?
A digital wallet is an app on your smartphone that contains digital versions of your debit and credit cards, so you can use your phone rather than a physical card to make purchases. Apple Pay, Samsung Pay and Google Pay are Australia’s most commonly used digital wallets.
What’s driving Australian consumers towards cashless payments?
Consumers are embracing cashless payments because:
- Cashless is more convenient: Digital payments allow consumers to make purchases anytime, using their smartphone or laptop. Tap-and-go capability for in-person purchases facilitates faster transactions, saving people the time and hassle of rifling through their wallets for notes and coins.
- Cashless is safer: Digital payments mean consumers can keep less cash on hand, reducing the risk that their money will be stolen. Electronic payment systems offer sophisticated ways of securing payments, including tokenisation, encryption and SSL.
- Cashless makes cross-currency transactions easy: Gone are the days of buying or exchanging physical currency at a bank to facilitate a payment in a different currency. With cashless payments, the exchange rate is automatically factored in to calculate the amount payable in the source currency.
- Cashless is more hygienic: With health and hygiene front of mind, people have become more mindful that cash can be particularly germy. Paying online or via smartphone means consumers don’t need to touch notes, coins or POS terminals.
What does a shift to cashless mean for businesses?
Businesses can also derive many benefits from the move to cashless payments.
- Cashless enables faster transactions: Digital payments using credit and debit cards or digital wallets let businesses serve customers more quickly.
- Cashless offers better security: Keeping less cash at your premises reduces the risk of theft and improves safety for your staff and customers. To ensure the security of digital payments, organisations should partner with a trusted payments provider who offers PCI DSS-level security for all transactions.
- Cashless makes financial management easier: With digital payments, every transaction is automatically recorded, so there’s no need to count notes and coins and reconcile cash payments manually.
- Cashless provides valuable information: Digital payments give you rich, real-time information about your customers and business performance.
- Importantly, cashless payments won’t completely replace cash: While cash is being used less and less, there will always be a place for physical currency. Businesses that only accept digital payments aren’t able to operate during power or internet outages – whether brief or longer-term driven by events such as natural disasters. For this reason, it’s prudent to keep cash as an emergency payment method just in case.
Australia’s transition to a cashless society offers benefits for both consumers and businesses. Progressive organisations are supporting the shift to digital payments both to meet consumer expectations and as a way to operate more efficiently.
Xetta is a powerful payment platform that enables simple, flexible and secure digital payments. We work with higher education, healthcare and local government organisations to leverage emerging payments trends and technologies to help them build future-focused, agile organisations.