Australia's shift to digital from cash hastened by COVID-19
COVID-19 may send tens of millions of coins to an early end, as the crisis virtually eliminates the demand for coins and Australia’s currency producers observe dramatic fluctuations in demand for cash.
According to Guardian Australia, “the Royal Australian Mint has seen “virtually no demand” for coins in 2020 as physical retail closed down, although the Reserve Bank of Australia – responsible for supplying banknotes – was forced to produce about 2.5bn extra banknotes to respond to a surge in Australians withdrawing their savings as early pandemic fear set in, behaviour which emptied consumer banks of their cash stores”.
The RBA acknowledges the increase in cash withdrawals doesn’t mean cash is back, as the popularity of cash transactions noted before the pandemic has actually intensified since the beginning of COVID-19 restrictions.
The RBA and the Mint will now consider further reductions in physical currency production as consumer behaviour favours online shopping, and retailers’ and shoppers’ preference for contactless payments increases.
In March the CBA recorded a record $1 billion in ‘digital wallet transactions’, and a 29 per cent reduction in ATM cash withdrawals in May compared with the same month last year.
There had been a 53 per cent drop in demand for coins between 2013 and 2019, said chief executive of the Royal Australian Mint, Ross MacDiarmid, adding that “there’s been virtually no sales for coins since the start of the year”.
“During Covid, what has unquestionably occurred is that people have stopped using currency entirely, or reduced it significantly,” he said.
“The question is what’s the legacy effect ... We just don’t know at this stage, and probably won’t know for another six months, until there’s been a period of normality.”
However, over-65s as a group have been resistant to digital payments, as have the linguistically diverse, lower-income families and students looking to save money.
“They know the less they have in their pocket, so the less they spend ... There is a level of comfort in cash, which continues to maintain anonymity,” he said.
Have you been using cash and coins less during the pandemic?