Will coin still have capital in a cashless society?

As more and more Kiwis ditch money and instead pay by internet, card and phone, the Reserve Bank is looking forward to a cashless future.


All of us have grown up with cold, hard cash – folding stuff tucked into wallets and coins rattling around in pockets and purses. Since our dollar was introduced in 1967, coins have become lighter and smaller, thanks to the use of aluminium and plated steel, while our notes have gone from paper to polymer … the Queen looking on quietly throughout. But as more of us ditch our Kiwi currency for a swipe or tap of a mobile phone or credit card, the future is looking increasingly cashless.


Of course, this has implications for us all­ – from high-street buskers and gold-coin charity events, to kids spending their pocket money on lollies in dairies after school. This is why the Reserve Bank is exploring the future of cash in its ongoing multi-year study: The Future of Cash – Te Moni Anamata.


Since the widespread introduction of debit cards in the mid-1990s, New Zealanders have enthusiastically embraced card purchases. However, as we use less and less cash, the per-transaction cost of maintaining the cash infrastructure increases. Businesses, in their natural desire to cut costs, then lean towards digital transactions, which further discourages customers from using cash. It’s a cycle that the Reserve Bank predicts will require government action in the near future to prevent notes and coins going the same way as the moa!


As part of its action plan, back in June the Bank asked members of the public for their opinions about the future of cash, and it has just released its findings.


The Results

People are split over whether it will be more difficult to obtain cash in the future, with 45% of respondents agreeing it will be harder and 37% disagreeing. Nearly half of respondents think the shift will happen over the next ten years.


However, most people agree that a cashless society will impact certain sections of the population more than others. The lack of internet access in rural areas is a major concern, as are the more vulnerable members of our community, such as those on low incomes, who might not be able to afford the associated tech required for internet banking.


Other worries raised in the report revolve around privacy and security, and the perceived freedoms that come with cash. Three-quarters of people regard the ability to withdraw money from banks as very important, and 76% thinks the loss of cash payments will impinge on personal freedoms. The increase in on-line scams is another major concern, with 73% agreeing that reliance on electronic money equates to more risk.


Interestingly, the Bank found that most people feel that losing cash will have a detrimental effect on their ability to save for unforeseen expenditure (75%) or stick to a budget (64%). Apparently, $50 notes stuffed into a mattress are still a better rainy-day precaution for many than a savings account!


Overall, the main issue expressed by respondents, according to the report, was that: “cash is important, that it will always be needed, and they were loath to imagine New Zealand without it” … that the ability to use cash represents a “personal freedom and right”! However, every time we express our freedom and make a purchase by electronic banking or card, we are moving the country one transaction closer to becoming cashless.


In the meantime, whatever future action the Reserve Bank sees necessary to keep the coins and notes flowing, for those of us who’ve already clicked into the digital era it’s important to choose online services wisely. For whether it’s a dollar bill in your pocket, or digits on a screen, money in all its forms will always be an essential part of our future.


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