Diana Clement: The end of cash is nigh

Goodbye cash. The folding stuff is on its way out. It won’t be long before we don’t have it at all, predicts New Zealand futurist and company director Melissa Clark-Reynolds of the NZ Centre for the Future. The pandemic helped speed the death of it. We now connect money with disease and no one really wants to touch the stuff.

That sea-change during the pandemic is one of the many signals Clark-Reynolds has seen in recent years as we race towards a world where our banks become less important and we transfer money through apps or other systems.

Money has changed an awful lot since Clark-Reynolds had a physical bank book. Even carrying plastic cards is becoming a thing of the past. Waving a phone is all it takes to pay in person.

Our bank accounts are becoming somewhere where we store enough money to pay the bills. The rest is hived off into accounts ranging from Trade Me to Sharesies here in New Zealand, or to overseas payments wallets such as Alipay and Amazon Pay. Crypto wallets are also jumping in popularity.

The death of cash is something that concerns the Reserve Bank of New Zealand (RBNZ), thanks to it getting harder to find places to withdraw cash, harder to find merchants who will accept it, and private firms becoming less interested in the “cash in transit” process.

“On balance, we are worried that if we don’t act soon, the cash system won’t be able to perform the roles required of it,” The RBNZ noted in its Future of Money Te Moni Anamata issues paper.

But it may be too late, says Clark-Reynolds, and the signals are that cash is on its way out.

“In the pandemic, we saw a very speedy decline in the use of cash and we didn’t start carrying it again after lockdown,” she says.

We use Paywave if we can, or at the very least pull out our physical cards and punch in our PIN.

The next signal is our online spending, which exploded from the 2020 lockdown, when our card transactions doubled. The likes of Shopify and Stripe mean any small enterprise can become an etailer. Even Eketahuna Country Meats can sell to us online, says Clark-Reynolds.

“I almost resent it if I have to go into a JB Hi-Fi or Harvey Norman,” she says.

In the United States, buyers can scan to enter an Amazon Go store, choose their goods and leave with payment deducted automatically from their Amazon Pay accounts. What’s more, people are buying direct with social spending on Instagram and TikTok more and more.

Overseas fintech trends will eventually find their way here.

“In the old days if you went out for dinner and one person paid, you’d say: ‘Look, I’ll give you 20 bucks next week’,” says Clark-Reynolds.

Now, apps such as Venmo allow friends to share payments instantly and send and receive money. It won’t be long before we’re doing that here in New Zealand

Digital technology is only going to get slicker. The EFTPOS machine will go and be replaced with QR codes, predicts Clark-Reynolds. The unexplained item in the packing area is an evolutionary dead end for sure, she says.

Losing cash does have issues. It will not be good for people who control their budget by withdrawing only cash.

And with overseas websites, there is little comeback if things go wrong. I know a friend at wits’ end trying to get money back from Expedia. That wouldn’t have happened with a local travel agent.

If money disappears from your Alipay account I doubt the helpdesk person has any moral obligation towards New Zealanders. If your crypto gets stolen, Bitcoin doesn’t exactly run a helpline.

On the other hand, if it’s your bank, the Banking Ombudsman in New Zealand can investigate. Or if your balance on Sharesies disappears, you can complain to the independent dispute resolution service Financial Services Complaints Limited.

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