Australia is expected to be almost entirely cashless by 2024, as buy now, pay later platforms boom

• Cash transactions in Australia are projected to fall to just 2.1% by 2024, according to payments giant FIS, which would rank it as the fourth most cashless country in the world.
• The transition away from banknotes and coins has only been accelerated throughout the pandemic as Australians flocked to contactless payment options and the rise of buy now, pay later platforms continued.
• Despite its decline however, abandoned attempts to ban $10,000 ban transactions and open cashless supermarkets suggest it won’t just disappear.
• Visit Business Insider Australia’s homepage for more stories.

Australia will almost have done away entirely with banknotes and loose change within three years, one of the world’s largest payment companies has boldly predicted.

Load Error

Releasing its annual global payments report this week, FIS noted that the trend towards a cashless society only accelerated during the pandemic.

By its reckoning, 98% of all payments nationally in 2024 will be cashless, up from around 91% today. If FIS’ prediction rings true, the transition would rank Australia’s abandonment of cash as only being behind Sweden, Denmark, and Hong Kong.

“The sun is officially setting on cash with the move [away from it] really starting to accelerate in our view as consumers cement their preference for more convenient, contactless, and safer methods of payment,” Phil Pomford, a general manager of the corporate’s Asia Pacific arm, told Business Insider Australia.

Pomford maintains that cash will still have some small part to play in the Australia economy but believes its once dominant status is well and truly over.

Naturally the transition away from it has been accelerated by the pandemic and some dubious claims over the cleanliness of the humble bank note.

The ecommerce boom has in turn also played a major role, as has the rise of tap & go functionality, with Australian banks doubling the spending limits during the pandemic.

“Even behaviourally, you can look at digital wallets, and the explosion of the likes of Apple Pay, Google, Samsung, PayPal, which are available at point of sale for people because we all literally live with our phones,” Pomford said.

All of those contributors factor in before Pomford even turns to the elephant in the room: the rise and rise of buy now, pay later platforms.

“Outside of Sweden perhaps with Klarna, Australia is probably leading the world in terms of growth at the moment,” Pomford said.

“We do see that growth continuing and that’s built off the number of players coming into the market and the fact that it’s already so embedded.”

BNPL platforms like Afterpay and Zip already account for 9.5% of the payment market, with FIS expecting that to double by 2024.

Even regulatory challenges, such as those the platforms face in the UK, will likely only legitimise the payment form further.

“We see regulations only as a positive thing. What that does, obviously, is open up transparency and brings protection to consumers and brings protection to all within the ecosystem,” Pomford said.

Dangers and doubts over cashless society

However, while no one is predicting the complete annihilation of cash just, there are potential dangers in its demise.

As Pomford points out, Australia must deal with the issues that arise as a result with “financial inclusion”.

“Important parts of the economy continue to rely on cash, such as charity donations and restaurant tip jars,” he said. “Further, fintechs and regulators need to collaborate to build new frameworks that allow for this rapid shift and use technology to boost financial inclusion for underserved communities.”

Beyond that, skeptics point out the dangers inherent in everything from payment system outages to government overreach.

Australians by the whole appear largely split on the question. During the pandemic, cash in circulation actually rose by $11 billion as Australians stockpiled notes while the number of ATMs plummeted. Meanwhile, a recent YouGov survey of more than 1,000 Australians found just one in three supported Australia becoming a cashless society.

This reluctance combined with a recently defeated ban on $10,000 cash transactions, and even Woolworths backflipping on its cashless store trial this week, suggests that cash still has some life in it just yet.

READ MORE: