A pledge to “work to support the ongoing provision of cash services” is new and prominent language in the Reserve Bank of Australia’s Corporate Plan for 2020/21.
These will be encouraging words for independent operators in the ATM sector, and a network of suppliers and banks talking through an overdue utility model.
The diminished demand for cash – via exaggerated concerns over the Covid-risks from handling grimy banknotes and coins at the point of sale – is real but easy to overstate.
ATM cash use accounted for 13 per cent of all consumer payments in Australia in calendar 2019. Over the June 2020 financial year, RBA data shows cash use still accounts for more than 10 per cent of consumer payments, even though ATM withdrawal numbers are down around 12 per cent.
So where is the cash paying for coffees and face masks in lockdown-land being sourced, if not at under-used ATMs in unduly quiet shopping streets and malls.
Under the bed, some of it.
“While the proportion of payments made using banknotes is declining, there is also still a significant minority of the population that continues to use cash for face-to-face payments,” the RBA remind the industry in their plan.
“Cash is still used heavily by some segments of the population,” the RBA said, the adverb perhaps disputed by fintechs and payments schemes imagining cash will be driven into a corner from which it may never crawl out.
While one traditional use of cash is out of fashion, a second use of cash has proven oddly popular this year.
“The number and value of banknotes on issue continues to rise, highlighting the importance of banknotes as a store of value as well as a payment mechanism,” the RBA explain in their plan, while diplomatically omitting distrust of banks as one likely factor behind this trend.
The stock of banknotes in issue in Australia has skipped ahead each week this year; drug dealers, bail-in worriers and ‘plan for retirement firsters’ all in on the act.
Or was: one outcome of lives smothered by second-wave Covid is that over the last week at least, the pattern of rising demand for cash has taken a pause, the numbers even turned down.
“Only A$21 million of new currency was issued” in the week ending Wednesday, 19 August 2020, Peter Sheahan, director of institutional markets at Curve Securities briefed clients a week ago.
This, Sheahan said, was “well below this fiscal year’s weekly average rise [in banknote demand] of $658 million”.
On Friday, the RBA balance sheet data for Wednesday 26th shows the stock of Australian banknotes on issue fell by $79 million.
That leaves $95 billion in Aussie banknotes nominally in circulation - except that so little of it really is. Around $8 billion is circulating, or so consultant Grant Halverson has calculated from recent RBA data.
With so much else to manage, the Reserve Bank is slowly opening up with the public on the conundrums that cash use (and misuse) poses to the financial system.
“Over the period of this corporate plan, the Bank will work with the payments industry and users of the payments system on policy issues relating to both legacy and emerging payment methods,” the RBA boilerplate.
The RBA adds later: “Ensuring that the quality of banknotes in circulation is high supports public confidence in banknotes”, a thought framed in the context of minimising counterfeits (not that there really are any).
The “quality” pros and cons surmounting cash and banknotes in Australia today is, of course, the belief stamped early in the public mind that cash may be contaminated and perhaps best avoided – by switching, of course, to the equally filthy plastic debit cards and credit cards, even if stored in virtual form on that forever handled, rarely cleaned staple of modern life, the smartphone.
In gentle steps, the Reserve Bank is revising messaging that before long may echo many of the key points of the combative cashwelcome.org campaign funded by the likes of Next Payments.
How should I handle banknotes? is a seemingly innocuous question and (revised) answer at the RBA banknotes portal.
“Banknotes should be treated like any other surface. When handling banknotes we advise practicing good hygiene.”
As Cash Welcome explain and have long complained: “While some Australian state health depts have advised consumers and retailers against using cash at the point of sale if possible, the World Health Organisation, RBA and Mint advice has been consistent – cash is no more susceptible to virus transmission than other common surfaces, including cards and POS terminals.”
Cash will always be common, and if all in the cash handling chain do their bit, as clean and as useful in commerce and life as it’s ever been.