It has become much easier over recent years to get around without physical cash – banknotes and coins. Australia has
been a world leader in the adoption of “chip-card” technology, allowing a quick tap of a credit or debit card to pay at
most retail outlets. Public transport tickets, parking meters, roads tolls, and more can all be easily paid for without cash.
In fact, over the last six years the amount of cash used by Australians has fallen by roughly one-third.
The benefits of a cashless Australia would be significant – and go well beyond not having to stand in line behind
someone counting out ten cent coins to pay for coffee. The tax revenue loss due to the cash economy is large. In 2012
the Australia Institute estimated that loss to be at least $3.3 billion dollars.
So we are increasingly becoming a cashless society but there are some risks and better planning that needs to be
Behavioural economist in the United States have shown, that paying by credit card you are likely to pay up to 100 times
more than had you paid by cash.
Paying cash sends a different signal to our brains when compared to paying by credit, with credit being a deferred pain.
Researchers have found that paying by Credit Card sends pleasure signals to the brain. Scientists have researched that
paying by cash sends the same signals to the brain as pain signals.
They have shown that you actually pause and think about the purchase when buying with cash.
Credit Card is a deferred method of gratification and almost plays on our inner belief that the future will be better.
Perhaps this is just one of the reasons as to why we’re moving to a cashless society. Retailers have also played on the
knowledge by coming up with Paypal.
One of my favourite sayings is ”look after pennies and the pounds will look after themselves”. When you start using
Eftpos, credit cards and moving away from cash it can become harder to look after the pennies.
I’m often amazed when I see younger people buying a Mars Bar using Eftpos.
Years ago we were all paid in cash in a little yellow envelope at the end of the working fortnight. You’d then have to
divide your pay into different buckets to ensure the funds lasted over the coming fortnight. Some money went to the
mortgage, or if renting, that was usually set aside first, then food and thirdly, perhaps some small savings for a holiday.
Anything left over you’d call the fun bucket and you’d spend on entertainment.
One thing I have noticed is that financially wealthy people still do this. Moving to a cashless society does have some
benefits but we need to mindful of some of the risks.