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Australia could go cashless within three years as government moves to regulate Google Pay and Apple Pay, explains a financial expert.
Treasurer Jim Chalmers unveiled a new bill on Wednesday that would give the Reserve Bank the power to regulate digital wallets as consumers increasingly abandon cash and embrace instant payments.
This means that Google Pay and Apple Pay would be subject to the same rules as credit cards and EFTPOS transactions.
Financial expert Sarah Wells said the latest proposed changes would likely see Australia become cashless by 2026..
“This is the next step towards a cash-starved society,” she told Daily Mail Australia.
Ms Wells said young women, in particular, fleeing domestic violence, needed to be kept in mind when regulating digital payments so they could not be so easily tracked by an abusive partner.
“We must ensure that we do not compromise the safety, education and experience of minority groups and young minds in our efforts to legislate contemporary payment platforms,” she said.
Australia could go cashless within three years as government moves to regulate Google Pay and Apple Pay, financial expert says (photo shows image of smartphone paying for goods)
Financial expert Sarah Wells said the latest proposed changes would likely see Australia become cashless by 2026.
Financial commentator Nicole Pedersen-McKinnon, author of How To Get Mortgage Free Like Me, said the latest changes were likely to accelerate Australia’s transition to a cashless society.
“That might do the trick very well.” A cashless society would bring huge disadvantages to regional, older and lower socio-economic communities and would also be a disaster for trying to teach children about money,” she told Daily Mail Australia .
Ms Pedersen-McKinnon said her personal spending fell by more than a third in three months when she switched completely to cash and froze her credit and debit cards.
When her wallet became empty of bank notes, she was forced to stop spending.
“There is a psychological phenomenon called coupling, which involves linking your purchases to payment difficulties,” she explained.
“Cash does this because the detriment of the dollar is immediate and in your face, so to speak.”
Digital payments are associated with fewer personal financial constraints, which Ms McKinnon said would be bad for those struggling financially.
“I’m really concerned about the spending implications for cash-strapped Australians if this march towards no physical cash continues,” she said.
With checks set to be phased out by 2030, the government has released a new report – A Strategic Plan for Australia’s Payments System – noting that very few transactions were being made in cash as more consumers go online. were moving towards digital wallets.
Financial commentator Nicole Pedersen-McKinnon, author of How To Get Mortgage Free Like Me, said consumers who stuck to cash rather than instant payment were better able to control their spending – and experiences it itself.
“We are relying less and less on physical forms of payment such as cash and checks, and we are increasingly relying on contactless card payments,” he says.
“Trends seen in the Australian payments system mirror those occurring globally, and the increasing complexity of payments presents challenges for regulatory frameworks around the world.”
The report also notes how instant payments have become much more popular since the 2020 Covid pandemic, with digital mobile wallets accounting for a quarter of non-cash payments.
“Australia’s payments system is becoming increasingly digitalized due to consumer preferences for seamless transactions and evolving technology,” it says.
“Card payments account for around 75 percent of non-cash retail payments, including 25 percent through mobile wallets.
“Online payments by debit and credit cards have also increased over the past decade, a trend that grew with the Covid-19 pandemic and has since normalized at a higher rate than before the pandemic.”
A Reserve Bank report released in June found that only 16% of in-person transactions were made in cash last year, half the level of 2019 before the pandemic.
Treasurer Jim Chalmers on Wednesday unveiled a new bill that would give the Reserve Bank the power to regulate digital wallets as consumers abandon cash and embrace instant payments (pictured, a sign at a Sydney Harris Farm store )
The RBA’s annual payments system report, released this week, noted that cash had gone out of fashion as more consumers adopted digital technology.
“There has been a continued shift from cash to card payments, and rapid adoption of mobile wallets offered by large technology companies,” it says.
The Reserve Bank report, signed by former governor Philip Lowe, highlighted the need for a digital currency, but promised liquidity would still be available.
“As the payments landscape evolves, the Bank will help shape the future of money in Australia by exploring the case for new forms of digital currency and ensuring cash remains a viable means of payment for those who need it or want it,” he said. .