Key Points
- The federal government and the central bank are committed to keeping cash as a payment option in Australia.
- Michele Bullock said the share of consumer payments made using cash declined from 70 per cent in 2007 to 13 per cent last year.
- The number of ATMs and bank branches where people can get money out has already been declining.
Most Australians are ditching cash in favour of digital payments and the Reserve Bank says that's putting pressure on the economics of ATMs and physically moving notes and coins around.
Although the federal government and the central bank are committed to keeping cash as a payment option in Australia, says its declining popularity is posing a challenge.
Speaking at a conference, Bullock said the share of consumer payments made using cash declined from 70 per cent in 2007 to 13 per cent last year.
The number of ATMs and bank branches where people can get money out has already been declining, though Bullock said the distances people needed to travel to access cash "has been little changed in recent years".
"But this may not be the case in the future if access points continue to decline," she told the AusPayNet Summit on Tuesday.
The RBA was keen to maintain "a broad coverage of ATMs at reasonable prices, particularly in regional and remote areas" and was open to hearing from industry on ways the central bank's regulation could help, she said.
The economics of the distribution system, which includes firms that physically transfer banknotes, coins and credit cards from one place to another, is also under pressure.
The strained economics of this business model was one of the reasons the consumer watchdog approved the merger of the two largest cash-in-transit businesses, although Bullock said the sustainability of the model was still in doubt.
Australia could be considering alternative models, such as a wholesale distribution arrangement, she said.
Should Australians pay a fee to use cash?
Bullock was asked whether Australians ought to pay a fee to use cash, as they already do with using ATMs.
She said cash "really does have a big, community, public service sort of aura attached to it."
"If businesses started charging people to use cash, I suspect there would be a very big backlash.
"At the moment, I think, we're probably in a position where it's very difficult to actually enforce payment for cash. But it's going to end up, what's going to happen, and what does happen at the moment, is that the costs end up embedded in the costs of the financial institutions that are providing the services, and people don't face them.
She said it would be a very big challenge to get people to face the costs of cash.
RBA governor's final speech of the year
Bullock also acknowledged that financially, it's been a "hard year".
"I'd like to think that we can all take some time to be with our families, and hopefully, things are going to get better next year," she said when asked for a Christmas message and her thoughts on the economic outlook for 2024.
The Australian economy has been battered by high inflation and a series of interest rate hikes aimed at bringing it down, with tough financial and economic conditions showing up in consumer confidence surveys.
The monthly index from the Westpac-Melbourne Institute Index has recorded its second-worst calendar year for sentiment since records began in 1974.
