While some may challenge themselves to give up cigarettes or chocolate, Brett Fairbank’s New Year’s resolution was to say no to cash. Here, he shares his experience of living without paper money.

It seemed a shock gesture when India announced it was recalling all 500 and 1,000 rupee banknotes this month. Intended to curb corruption and recoup unpaid taxes, removing more than 80% of paper money in a country that’s the world’s second largest consumer of currency notes1 has instead created significant headaches for its billion-plus citizens.

As the people of India have no doubt discovered, cash is inefficient, bulky to move and difficult to transfer. It’s also not easily traceable (for better or worse).

Several digital alternatives have existed for some time now: contactless cards, cryptocurrencies and mobile payments are all growing in popularity. Which begs the question, could we be seeing the end of cash?

At the start of 2016, I decided to see if I could go for a full year without money, an experiment in cashless living that would see me eschew physical coins and notes in favour of cards and smartphone payments. I didn’t intend to go off-grid, though. Quite the opposite; I would be leaving behind a bigger digital footprint than ever before.

What would be the advantages and inconveniences of this upgrade, and could any item be bought without cold hard dough?

for change

My own frustration with physical cash came to a head when I realised I was always hunting for ATMs in order purchase small items such as cups of coffee. If I couldn’t find my bank’s ATM nearby, I had to pay a fee to use competitor machines – sometimes as much as the coffee I was purchasing.

What’s more, after breaking a note into smaller coins, loose change would pile up on my bedside table, withdrawn from circulation due to their bulk and inconvenience. How many other nightstands and tables throughout the world have similar stacks mounting up?

The (hidden) cost
of cash

Merchant fees for digital transactions can be annoying, but physical cash comes with its own costs – as much as 2.5% per transaction2.  The taxpayer funds the government to print notes and mint coins, even when it’s not economically viable. Until the fall in commodity prices this year, it used to cost seven cents to mint every five cent coin3.

For banks and other financial institutions, there’s the significant cost of managing the distribution of cash and keeping it secure. Consumers, meanwhile, face frequently exorbitant ATM fees and lost time and productivity spent retrieving cash. More broadly, the government loses out on tax revenues through undeclared cash-based incomes.

Digital disruption
of cash

It’s clear that physical cash is already on the decline. From 2007 to 2013, cashless became the preferred way for Australians to pay, moving from 30% of total transactions to 53% in just six years4.

Similar trends were found by credit card company Visa, which showed Australian consumers were continuing shifting to electronic payment methods over cheques and cash5. They’re also growing increasingly familiar with mobile payment solutions, with 70% saying they’re aware of the technology – although only 8% have actually used it.

Earlier this year, Apple CEO Tim Cook predicted that the Apple Pay service would help usher in a cashless society6. How far away is that future, really?

Despite being the first European country to introduce banknotes in the mid-1600s, Sweden is one of the frontrunners in transitioning entirely away from hard currency. Currently, 95% of Sweden’s retail sales are handled with credit cards7. Meanwhile, hundreds of Swedish bank branches no longer carry cash and thousands of ATMs have been decommissioned.

My year
without money

I’m nearing the end of my cashless experiment and I’m confident I’ll ring in the New Year without withdrawing money from an ATM. I’ve actually found staying cashless relatively easy, with several unforeseen benefits. These are the lessons I’ve learnt so far:

  • App-ify your low value transactions
    My first challenge was finding an alternative form of payment for low value transactions such as coffee and food. Many merchants are scrapping minimum limits for credit cards, but I’ve also been trialing smartphone apps that allow coffee or lunch to be pre-ordered, handling payment through a stored credit card. This has been very convenient for the morning dash on the way to work or between meetings (no more queuing!).
  • Cashless travel is a cinch
    Getting around without cash is fairly easy these days. Public transport can be paid for through direct debit, while taxis and ridesharing services all support electronic payments. Many city councils also now accept credit cards at the parking meter or support cashless parking apps – which carries the added bonus of sending a reminder before your meter expires.
  • Optimise platform choice for larger purchases
    For bigger ticket items it can be worth considering a payment platform that offers rewards, such as a credit card or a loyalty program offering.
  • A fuller ability to follow the money
    Another upside to electronic payments is that I now have full visibility into my spending habits, making it easier to forecast and budget.

Cashless is
the new king?

There is a downside to digitisation and automation: the loss of control. There’s no easy way to store digital dollars under a mattress, should the online world suddenly go offline. Consumers will need to balance this trade-off between convenience and control as the cashless transition continues.

Thanks to all the electronic alternatives, I’ve proved that it is possible to leave cash in the ATMs – if you want to. Too many of us still enjoy the feel of a crisp note, as well as the freedom and anonymity physical cash provides. After all, Australia invented polymer currency, one of the most secure banknotes in the world. Shouldn’t we hold onto that a little longer?

A version of this post previously appeared on LinkedIn.



Brett Fairbank

Brett Fairbank is a director in PwC’s Experience Centre, based in Melbourne.

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