Cash is no more the king, the card is

ANOTHER Australian first! We now pay more by card than cash. But should we be celebrating? I’m not so sure.

Cards are more secure, so the banks tell us. Cards are more convenient, so the banks tell us. Cards make a lot of money for the banks — definitely.

For the first time, Australians spent more on debit and credit cards than any other form of payment. According to the Reserve Bank this week, 52% of transactions are now made with a card. About five years ago, cards accounted for a third of purchases; 10 years ago it was closer to a quarter.

The main reason for the surge is our new, fast, want-it-now electronic lifestyles.

We no longer spare the time at the supermarket checkout while the teller processes our payment, instead we just tap.

We no longer spare the time to visit a store to make a purchase, instead we just enter our card details on the internet from our lounge rooms.

And we no longer even bother to walk to the computer sometimes, instead we use our phone apps to do our banking, order the groceries or arrange travel. It seems our whole lives and economy now depend on the use of our phones and apps.

But as with anything that has a monopoly, given cards now dominate our lives, it also puts us at a massive risk. Our lifestyles and personal finances are beholden to these apps and cards.

Take three recent examples from readers.

“Someone” somewhere got hold of the credit card number of one reader and used it for some naughty transactions in ... Singapore. Without their knowledge, a phone call or text, their bank blocked the card. Phew, you’d think, what a relief. Think again.

It caused a major disruption for the owner of the card and his family. The card was blocked without them knowing, they couldn’t make any purchases and their regular transactions linked to the card bounced. Disaster! Once they figured out what had happened, the bank made them wait 10 days for a new card.

Convenience factor: zero. Risk of household disruptions: 100%.

Three weeks ago, another reader’s son left his wallet and debit card on the train. The wallet was immediately handed in (praise be) but when the station called the bank to get a phone number or pass on a message to the boy, instead they blocked the card. The 13-year-old goes to lost property and gets his wallet back but then he’s stranded with no access to his card for purchases, or to top up his Myki to get home or to get cash.

Then Tuesday this week, there was a similar story from another reader. She was ordering food through a phone app and “ping” — card declined. Again no notification, no phone call or text from the bank. Her card had been blocked. Not because someone had stolen the number but because the bank’s security system flags all transactions to this particular food service as potentially suspicious. And automatically blocks it.

Of course, the bank told her, she wouldn’t be stranded if she kept two cards.