Why cash is no longer flavour of the month
Cash has been falling out of favour for a long time but 2020 may prove to have been the tipping point for something that’s been around for about 5000 years.
There has been a big rise in cash in circulation, thanks in part to the level 4 Covid-19 lockdown last year, but even so, just under 2 per cent of our money is now held in banknotes.
There had been a change in mindset since Covid-19 hit, says Greg Harford, chief executive of Retail NZ.
‘‘A year ago we surveyed our members and very few of them could see a time when they would not be accepting cash in the business.
‘‘But with Covid-19 hitting us last year we saw a big switch towards customer demand for card payments. Cash is certainly not dead, but it is being used and accepted a lot less than it would have been 12 months ago.’’
Although it’s legal tender, businesses don’t have to give out or accept cash, except for payment of a debt.
UK campaigner Brett Scott, author of The Heretic’s Guide to Global Finance: Hacking the Future of
Money, said people who value cash either reject the domination of the banking sector, or are rejected by the sector.
It’s fallen into decline partly because of a concerted effort by the banking industry, payments companies, and financial technology companies, he said.
‘‘The whole structure of the global economy is moving towards centralised corporate automation like Amazon, and cash stands in the way of that. So there are structures in the global economy that are trying to crush cash right now, because it’s jamming the ability to have largescale automation.’’
A degree of ‘‘moral panic’’ had been created by companies like Mastercard, which ran overt campaigns against cash, Scott said.
‘‘So there’s been this general demonisation of it, and also a huge amount of demonisation of it amid Covid.
‘‘Ironically, research will show the most dangerous items, for example, in the supermarket are things like pinpads on card machines, and touchscreen self-checkout terminals and the handles of trolleys, but people for some reason have this idea in their head that cash is this vector for disease, which is simply not the case.’’
Not many retailers refuse to take cash yet in New Zealand, but there are some, including Ben & Jerry’s at Wellington Airport, and retailers and food outlets at Otago University campus.
About 1 per cent of customers walk away from Ben & Jerry’s Wellington Airport store due to it being cashless, said Sean Farrell, Ben & Jerry’s New Zealand and Australia head of retail.
‘‘Our staff do a great job in explaining the reasons behind our stance and most travellers then happily use their card to pay instead, so we will continue with cashless in Wellington Airport for the foreseeable future.
‘‘There are many positives in being cash-free – improved operations and hygiene, a positive environmental impact . . . which can mitigate the loss of 1 per cent of customers. That said, we don’t want to lose any customers.’’
Last year, the University of Otago decided to trial a cash-free campus, a move which was such a success it’s now permanent. But not everyone was happy at the time.
‘‘Most of the small number of complaints we received related to the convenience of using cash, using cash as a tool for budgeting and not wanting to create a digital footprint from electronic payments,’’ said University of Otago Union general manager Stephen Baughan.
The university was still accepting cash at a convenience store.
Electronic payments were faster for both customers and staff, and more efficient – managing cash over 26 tills took about 40 hours a week, Baughan said.
It was also safer for staff who had been delivering cash to tills to be used as float, and collecting it to be banked. Multiple people handling cash was also considered a potential Covid-19 risk, he said.
The move to ditch cash was ultimately being driven by customers, said Retail NZ’s Harford.
The advantage of cash was that there was no cost directly to the retailer in accepting it, unlike the fees for card payments, although there were other indirect costs such as security and paying staff to handle banking, he said.
Over the next five years there will be even more of a shift towards electronic payment.
‘‘The key thing that often gets lost in the conversation about cash is the level of love that customers have for contactless payments. It is perceived to be quicker and easier and more convenient for customers to tap their card and go, or watch, than it is to be scrabbling around for the right change or the right cash, and retailers are ultimately customerdriven,’’ Harford said.
An Auckland mother of six, who did not want her name used, said cash was an option she wanted to keep, but it was getting harder to find places to get it or use it. She had noticed ATMs were being closed.
Her children received pocket money in cash for chores, and although she paid all her bills online because it was a good way to track her money, using cash was another budgeting tool.
‘‘I withdraw money also because then you spend less – I say to myself, well, ‘this is how much money I have’, and then work with that.’’
‘‘There are structures in the global economy that are trying to crush cash.’’
UK author Brett Scott
New evidence from the Ministry of Business, Innovation and Employment shows the majority of residential landlords own one rental property.
The total number of active landlords with bonds lodged, as of February 9, was 120,330, the ministry said. Of those landlords, the number who lodged one bond, which would generally but not always be for one property, is 93,706. That equates to about 77.9 per cent of the total.
The number of landlords who lodged two to three bonds, which (again) would generally but not always represent two to three properties, was 19,524. That is about 16.2 per cent of the total.
Property accountant Anthony AppletonTattersall, who sought the information, said the response revealed a drop of nearly 2 per cent in investors who owned a single rental, compared with the same data supplied in 2015. But it also showed that landlords with four or more rentals made up less than 6 per cent of the bond lodgement data.
While popular perception had it that all landlords owned multiple properties and reaped big capital gains as a result, the bond data suggested this was not true because, although there were some large landlords, they were not the majority, Appleton-Tattersall said.
The bond data showed the number of landlords who lodged 4-10 bonds was 5037; 698 lodged 11-20; 458 lodged 21-50; 561 lodged 51-200; and 346 lodged more than 200.
This suggested the number of landlords with 50 to 100 properties was about 0.47 per cent, while the number of landlords with more than 200 properties was about 0.29 per cent, AppletonTattersall said. ‘‘Most landlords are very much small-time operators, many of whom have the majority of their life savings in that property.’’
The data also revealed a smaller total number of landlords than in 2015, with a decrease of more than 10,000, or about 8 per cent, he said. ‘‘Given we continue to hear that home ownership rates are dropping, there must be more rental properties, which supports the conclusion that landlords are consolidating their holdings.
‘‘Depending on the quality of the bond data, the drop in landlord numbers could alternatively, or additionally, indicate that more landlords are using a property manager.’’