28 Days Without a Bunnings Sausage: The Impact of a Cashless Society on People and Business
So, I’m an early adopter.
I owned a Motorola attaché, I was into U2 before they were cool [and sadly, after], and I switched over to my native bank paying app the minute it launched.
Recently, there was a story out of Sweden where they’re investigating the idea of people having a chip put in their arm so they can use it for payments. I’ve also seen [ugly] smart rings with RFID chips for contactless payment.
Sign me up.
I want to know though, will it work? Is there such a thing as a cashless society and can I do that? I’m the kind of person that likes this idea. I like that it makes the tracking of your spending easier too.
So, I decided to run my own personal experiment — 28 days without cash. I started on the first of February. I emptied my wallet [a disappointingly fast task] and set off on my 28 days without cash mission.
I originally planned to do all payments via phone on my native bank payment app, but that didn’t work. I had work things to pay for, and I had a couple of different personal credit cards that I use for different projects. But I could still be cashless by using a combination of pay by phone and different credit cards.
I made it through the 28 days without having any cash, but it did require some planning. I also ended up spending a lot more money out of my bank payment app on my phone than I thought, so I had to keep topping that up.
But what couldn’t I do?
- As the title of this article says, I couldn’t buy a Bunnings sausage. I guess that extends to other sausage sizzles as well. They work in a cash only environment.
- I couldn’t buy things on Buy, Swap and Sell on Facebook and on Gumtree, they are often people that are selling directly and want cash.
- My local pizza shop doesn’t allow card payment for deliveries, so I couldn’t order a pizza.
- Around the 26th, I went to the bakery to get bread for the week. As I walked down Sydney Road in Coburg I noticed that some of the businesses had “cash only” signs. So I wasn’t going to be able to buy Thai food, or cake, or dim sims because they’re all cash only. This is probably more of an issue in strip shops like this, and less so in shopping centres or the CBD.
After the 28 days I gave it some thought…”What else is missing?” I could survive without a Bunnings snag, without shopping on Buy, Swap and Sell, and I could switch my pizza shop.
There were two things to me that stood out as being not there yet, and perhaps this is an opportunity for some entrepreneur. Firstly, there’s no single system that allows us to select which account we want to use for contact-less payments. I have three different business credit cards and three different personal credit cards and a debit card for my contact-less pay app on my phone. I would like to be able to have all seven of those loaded so I could pick which one I’m using for my contact-less payment.
The other thing has been a bug-bear for me for a while…when I use my credit card, I want a system where the tax receipt from the retailer goes directly to me by email so I don’t have to carry all of that thermal paper around and it also reduces waste and improves efficiency. For a business that will be awesome because the receipts will be emailed to the right spots automatically.
So, what are the impacts of a cashless society and how are they likely to change?
The number one impact…we the customer, will end up paying for the convenience.
It’s obvious with credit cards, we pay interest and fees every year, but that’s the visible piece. The invisible piece is that the businesses pay merchant fees and transaction fees for not only credit cards, but for eftpos and debit cards too. They’re lower for those other types of transactions than credit cards, but they still exist. In a cashless society, these fees will likely become more significant as banks transaction fees for cash are reduced to zero.
We can also expect that governments will want to have more control of the tax revenue system. This is going to result in increased pressure on businesses to move to cashless payment solutions. We’ve already seen recently the Australian Taxation Office signalling that they’re focused on businesses that operate cash only, advising establishment of a payment solution. They say it’s going to increase bookkeeping accuracy and improve records, but I think it’s about them having some better oversight because they’ll do data matching with the financial institutions and match them up with tax returns.
The cashless society will have a secondary impact, too. As we see the rise of second- and third-tier payment solutions providers with cheaper systems, and lower compliance regimes, businesses will need to focus more on financial and internet security. This will increase costs too, especially for businesses that operate in an online-only environment where their chances of fraud and hacking are much higher.
All of these factors will lead to one thing. Upward cost pressure. One way or another, businesses will need to build these costs into their products and services, if they haven’t already. In my humble opinion, they could end up accounting for at least five percent of the price, or even more for internet businesses where margins are slimmer.
But in the end, I’m lazy, so if there’s a way that I can carry less stuff around that’s easier for me to do my payments, then I’m all up for it. Only issue is, once my chip’s installed, what do I leave behind the bar when I set up a tab?