Cash is still king, some say – but for how long?

I’m never quite sure when I’m paying a retailer these days whether they prefer cash or card. I often wonder if the cashier might find having to deal with notes and coins too fiddly. Would they prefer the simplicity of a cashless transaction? One café I frequent leaves me in no doubt of their preference.

“Cash is king,” the owner replies when I offer him the option. For him there’s no doubt. But what about others? And what are the disadvantages of switching to a fully cashless operation?

According to at least one marketing analyst, there’s a good reason to stay with cash – if you are the buyer. The analyst in question is University of Melbourne senior lecturer Alex Belli. Dr Belli is the co-author of newly published research that has analysed what is known as the ‘cashless effect’. Is this long-known phenomenon still prevalent in today’s increasingly electronic world?

What is the cashless effect?

The phenomenon is very simply explained by Dr Belli. “The cashless effect is the phenomenon of spending more money but also buying more products when paying by cashless methods.” The effect holds regardless of the method of cashless payment, he said. “It could be credit cards or BNPL (buy now, pay later) schemes.”

The psychology behind the cashless effect is also simple. Not being able to see funds disappearing your eyes removes – or at least lessens – the feeling of money being spent. And previous research has shown such pain to be physically real, not merely metaphorical.

Now that society has become increasingly more cashless, has this effect worn off, or is it as strong as ever? According to Dr Belli and his colleagues, the truth lies somewhere in between.

In an article titled Less cash, more splash? A meta-analysis on the cashless effect, the researchers found the phenomenon has generally weakened over time.  It remains significant, nonetheless.

The research found that “the cashless effect is stronger for conspicuous (versus non-conspicuous) consumption situations”. In short, that means it is stronger when comparing one’s wealth with others – the ‘keeping up with the Joneses’ effect.

Dr Belli and his team also found the effect to be stronger in ‘pro-social’ consumption situations. Examples of this include giving tips and making donations.

The advantages and future of cash

I was surprised to learn recently that one of my sons employs cash as a method of budgeting. He uses different envelopes for different items or events for which he is saving. As it turns out, this remains a popular and effective budgetary method, Dr Belli said.

As effective as it may be, the indications are that using cash will not be possible for much longer. Some believe the use of cash will effectively be at an end in Australia by 2030. RMIT associate professor of finance Dr Angel Zhong predicts our country will become “functionally cashless” by the end of this decade.

According to Dr Belli, as we approach this seemingly inevitable life without cash, the cashless effect is likely to diminish. “In that case, the pain of paying will maybe die out and people won’t feel this anymore. They will treat cashless methods as cash,” he said.

Like it or not, it seems the days of declaring “cash is king” are almost certainly numbered.

Also read: The Aussies being left behind in switch to cashless society
Disclaimer: All content on YourLifeChoices website is of a general nature and has been prepared without taking into account your objectives, financial situation or needs. It has been prepared with due care but no guarantees are provided for the ongoing accuracy or relevance. Before making a decision based on this information, you should consider its appropriateness in regard to your own circumstances. You should seek professional advice from a financial planner, lawyer or tax agent in relation to any aspects that affect your financial and legal circumstances.

Andrew Gigacz
Andrew Gigacz
Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.


  1. Just a reminder that the end of this decade is on 31- 12- 2030 , NOT 2029 The decade started 1-1-2021. When you count to ten you start at 1, and end up at 10. The end of a decade will always have a zero at the end., same as this millenium started 1-1-2001

    • Exactly my thoughts. They just want to control our money like they control everything else. It’ll mean if we want to give to a homeless person etc,we’ll have to go buy something for them. This will then cost us more. I’m certainly not looking forward to this…. CASH IS KING!!!

  2. YES, Cash is KING. If cash is taken away Australia will fall into two parts those that have credit cards and those that don’t. Those who don’t will be left behind on the street due to the banks refusing to grant them cards and poor credit ratings. How do we give cash to our kids as pocket or birthday money? The government is trying to control us more every day and it has to stop.

  3. My wife and I both on Aged Pension, went for a break to see Vivid Sydney last week. At Central Station the two restaurants there, one serves also beer also. They have a sign on their counter “CARD ONLY”. I approached both restaurants employees, and I asked them if I use my Eftpos if they charge me a percentage for using my card. She said yes, I responded ” Hang on, I am doing your bidding and use my Card while I have cash in my wallet which you do not accept, and still charge me a percentage?” Her answer was yes…….I gave her my back and walked out. I think this percentage charge is of their own doing, if everyone does as I did, they would change their mind quick smart. So much for Grey Power.

  4. Phone to phone transfer of cash – mobile wallet. My bank offers it, but I do not use it. That would still be a problem for giving to homeless people, buskers, etc. A re-loadable cash card is another possibility, but the receiver still needs a phone or terminal. Then there are internet outages, power cuts – a big problem for shops. People living in conflict areas usually try to keep an open air ticket and/ or the car fully fuelled at all times and plenty of cash – there are good reasons for that which you probably don’t have to worry about in Australia!

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