On a sweltering day in Los Angeles last week, I learnt an important lesson. For the past year, I’ve been tapping my phone on card readers to make purchases. It means less to carry and fewer things I could lose or have stolen, an especially attractive proposition when travelling.
Heading to a country that’s home to some of the world’s tech giants and a state that’s home to Silicon Valley, I thought I could get away without cash and a physical credit card. After all, I hadn’t used either for almost a year back home. Rookie error.
For most things, digital payments passed. I bought food, entered museums and indulged in a coffee with Taylor Swift’s face printed on the foam. But the convenience soon ran dry.
I couldn’t load money onto the transport card used to take buses and trains across LA without cash or a physical card. To make matters worse, I couldn’t withdraw cash from ATMs or stores without a physical card. I was financially stranded.
Uber was an option, until I saw the prices and estimated traffic times. I had to get creative. So began my stint beside the door of a Starbucks, asking strangers if I could pay for their coffees with my phone in exchange for cash.
I spent half an hour making up excuses as to why I couldn’t approach people: they were on a phone call, it looked like they were up to something shady or, perhaps most obviously, I would look shady.
Finally, I mustered up the courage to stop two guys. Silly choice: “Sorry, we don’t carry cash, like your accent though.” Of course, they were young and tech-savvy. I needed to whittle down my demographic to people for whom physical cash was not yet a relic.
In the end, a family on a road trip from Utah gave me a reprieve: “Sure, we can probably help you.” An armful of coffees later, I had $50 worth of cash – and a fiver generously kicked in for luck.
Australia is ahead of the curve when it comes to the adoption of digital banking tools – including, crucially for me, the ability to tap my digital card to take public transport in Sydney. According to a report by card-issuing platform Marqeta last year, more than 80 per cent of Australians said they had used digital wallets in the past 12 months compared with 71 per cent in the US.
For a country like the US, where there are many street vendors who only take cash, and a tipping culture in which servers often prefer cash-in-hand, it makes sense that cash remains king.
In Australia, however, cash is used only for about 13 per cent of payments and last year about 2.4 billion payments were mobile wallet transactions.
Mobile wallets have their pitfalls, but they’ve saved me time digging around for cash or a physical card. Everything is stored on one device, which many people now carry around with them everywhere.
This year, the Reserve Bank found one in three Australians regularly used a mobile device with a digital wallet to make in-person payments. Unsurprisingly, younger people have been the fastest adopters, with more than 60 per cent of 18- to 29-year-olds making at least one payment a week using a mobile device, according to the study.
The need for cash in Australia has faded so much that more than $1 billion worth of notes has disappeared from circulation in the past 12 months.
Australia also has a fairly seamless bank transfer system, which means you can send and receive payments directly from one bank account to another with a person’s account and BSB number. In 2018, PayID made transferring as simple as having someone’s mobile number or email address.
While a similar feature is available for some in the US, it’s often more difficult or costly to instantly transfer money to someone at a different bank, with the federal government in July launching a real-time payments system to make bank transfers easier.
That might explain the popularity of peer-to-peer payment apps such as Venmo, which hit nearly 78 million active users in the US (just under one-quarter of the country’s population) in 2022. The Australian equivalent, Beem, which is mostly used by younger customers, had about 1.4 million users, or about 5 per cent of the Australian population, in 2021.
Standing outside Starbucks, I was reminded of how advanced Australia’s digital payments space is. Unless you’re willing to trade in some dignity, if you venture abroad a physical card or cash should remain decisively on your packing list.
Amused by my tactics, the family from Utah asked if I could be included in their road trip scrapbook. “Can we get a photo?” they asked. “We’ve never met an Australian before.”
I’d become so used to my mobile wallet that walking away with cash that day felt somewhat foreign. But I’ve kept the five dollar bill this kind family gave me for the day youngsters start to tell me they’ve never seen cash before.
Millie Muroi is a business reporter at The Sydney Morning Herald covering banks.
The Opinion newsletter is a weekly wrap of views that will challenge, champion and inform your own. Sign up here.
Source: Thanks smh.com